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Arizona Public Safety Personnel
Retirement System
MESA POLICE DEPT. (018)
Actuarial Valuation
As of June 30, 2025
Contributions Applicable to the Plan/
Fiscal Year Ending June 30, 2027
13420 Parker Commons Blvd, Suite 104 Fort Myers, FL 33912 · (239) 433-5500 · www.foster-foster.com
November 2025
Board of Trustees
Arizona Public Safety Personnel Retirement System
Re:
Actuarial Valuation as of June 30, 2025 for Mesa Police Dept. (018)
Dear Members of the Board,
This report details the annual actuarial valuation of the Arizona Public Safety Personnel Retirement System
(PSPRS) as of June 30, 2025. The valuation was performed to measure the plan’s liability and funding levels
and to determine the actuarially appropriate funding requirements for the applicable plan year. This report
was prepared for use by the Board and those designated or approved by the Board. Use of the results for
other purposes may not be applicable and could produce significantly different results.
DATA AND ASSUMPTIONS
In preparing this report, we have relied on personnel, plan design, and asset information supplied by PSPRS.
In our opinion, the assumptions used in the valuation, as adopted by the Board, represent reasonable
expectations of anticipated fund experience. Other sets of assumptions and methods could also be reasonable
and could produce materially different results. 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.
DISCLOSURES AND LIMITATIONS
Future actuarial measurements may differ significantly from the current measurements presented in this
report due to factors such as the following: plan experience differing from that anticipated by the economic
or demographic assumptions; changes in economic or demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements (such as the end
of an amortization period); and changes in plan provisions or applicable law. Due to the limited scope of this
report, we did not provide an analysis of these potential differences.
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 its liabilities.
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.
ACTUARIAL CERTIFICATION
The valuation has been conducted in accordance with all applicable laws and regulations, as well as generally
accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued
by the Actuarial Standards Board; specifically No. 6 for Measuring Retiree Group Benefit Obligations/No. 4 for
Measuring Pension Obligations and Determining Pension Plan Costs or Contributions, No. 23 for Data Quality,
No. 27 for Selection of Economic Assumptions for Measuring Pension Obligations, No. 35 for Selection of
Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations, No. 44, Selection and
Use of Asset Valuation Methods for Pension Valuations, and No. 51, Assessment and Disclosure of Risk
Associated with Measuring Pension Obligations.
In our opinion, the Minimum Required Contribution set forth in this report constitutes a reasonable actuarially
determined contribution under Actuarial Standard of Practice No. 4.
The undersigned are familiar with the immediate and long-term aspects of pension/OPEB valuations and meet
the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions
contained herein. All of the sections of this report are considered an integral part of the actuarial opinions.
To our knowledge, no associate of Foster & Foster, Inc. working on this report 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 PSPRS Board of Trustees. Thus, there is no relationship existing
that might affect our capacity to prepare and certify this actuarial report.
Respectfully submitted,
Foster & Foster, Inc.
____________________________
____________________________
Bradley R. Heinrichs, FSA, EA, MAAA
Paul M. Baugher, FSA, EA, MAAA
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
TABLE OF CONTENTS
SUMMARY................................................................................................................................ 5
CONTRIBUTION RESULTS .............................................................................................................. 8
Development of Employer Contributions – Tiers 1 & 2 Members ............................................... 8
Development of Employer Contributions – Tier 3 Defined Benefit (DB) Members ..................... 9
Development of Contributions – Tier 3 Defined Contribution (DC) Members .......................... 10
Contribution Rate Summary ....................................................................................................... 11
Impact of Additional Contributions ............................................................................................ 12
Historical Summary of Rates ...................................................................................................... 13
LIABILITY SUPPORT ................................................................................................................... 14
Liabilities and Funded Ratios by Benefit - Tiers 1 & 2 ................................................................ 14
Liabilities and Funded Ratios by Benefit - Tier 3 ........................................................................ 15
Derivation of Experience (Gain)/Loss ......................................................................................... 16
Amortization of Unfunded Liabilities - Tiers 1 & 2 ..................................................................... 17
Amortization of Unfunded Liabilities - Tier 3 ............................................................................. 17
ASSET SUPPORT ....................................................................................................................... 18
MEMBER STATISTICS ................................................................................................................. 23
Statistical Data – Active Members.............................................................................................. 23
Statistical Data – Inactive Members ........................................................................................... 24
Active Age, Service and Pay Distributions – Tiers 1 & 2 ............................................................. 25
Active Age, Service and Pay Distributions – Tier 3 ..................................................................... 26
Age Distributions – Inactive Members ....................................................................................... 27
ACTUARIAL ASSUMPTIONS AND METHODS ..................................................................................... 28
PLAN PROVISIONS .................................................................................................................... 35
ACTUARIAL FUNDING POLICY ...................................................................................................... 41
SUPPLEMENTARY INFORMATION .................................................................................................. 46
Glossary ...................................................................................................................................... 46
Discussion of Risk ....................................................................................................................... 50
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
5
SUMMARY
The regular annual actuarial valuation of the Arizona Public Safety Personnel Retirement System for the Mesa
Police Dept., performed as of June 30, 2025, has been completed and the results are presented in this Report.
The purpose of this valuation is to:
Compute the employers’ recommended contribution rates for the fiscal year ending June 30, 2027.
This information is contained in the section entitled “Contribution Results”.
Compute the liabilities associated with benefits likely to be paid on behalf of current retired and active
members and compare accumulated assets with the liabilities to assess the funded condition. This
information is contained in the section entitled “Liability Support.”
Valuation Date
June 30, 2025
June 30, 2024
Applicable to Fiscal Year Ending
2027
2026
EMPLOYER CONTRIBUTION REQUIREMENTS (AS A PERCENTAGE OF PAYROLL)
Tiers 1 & 2 Members
Pension
60.24%
58.16%
Health
1.51%
1.33%
Total
61.75%
59.49%
Tier 3 Members 1
Pension
8.49%
7.96%
Health
0.08%
0.09%
Total
8.57%
8.05%
FUNDED STATUS
Tiers 1 & 2 Members
Pension
56.5%
52.4%
Health
48.4%
48.2%
Total
56.4%
52.3%
Tier 3 Members
Pension
106.3%
111.3%
Health
303.5%
355.1%
Total
108.6%
114.2%
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, 2025 – Mesa Police Dept. (018)
6
CHANGES FROM PRIOR YEAR
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
Tiers 1 & 2
Tier 3 Members
Pension
Health
Pension
Health
Contribution Rate Last Valuation
58.16%
1.33%
7.96%
0.09%
Asset Experience
(0.41%)
(0.01%)
(0.17%)
(0.01%)
Payroll Base
2.56%
0.06%
0.00%
0.00%
Liability Experience
(2.53%)
0.02%
(0.22%)
0.01%
Additional Contribution
(1.19%)
0.00%
0.00%
0.00%
Assumption/Method Change
2.06%
0.05%
0.00%
0.00%
Compensation Limit Update
0.00%
0.00%
0.71%
0.00%
Other
1.59%
0.06%
0.21%
(0.01%)
Contribution Rate This Valuation
60.24%
1.51%
8.49%
0.08%
FUNDED STATUS
Tiers 1 & 2
Tier 3 Members
Pension
Health
Pension
Health
Funded Status Last Valuation
52.4%
48.2%
111.3%
355.1%
Asset Experience
0.4%
0.4%
1.9%
6.2%
Liability Experience
1.3%
(0.3%)
2.6%
(50.7%)
Additional Contribution
1.1%
0.0%
0.0%
0.0%
Assumption/Method Change
0.0%
0.0%
0.0%
0.0%
Compensation Limit Update
0.0%
0.0%
0.0%
0.0%
Other
1.3%
0.1%
(9.5%)
(7.1%)
Funded Status This Valuation
56.5%
48.4%
106.3%
303.5%
Asset 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, 2025 was 11.0% for Tiers 1 and 2 and 12.5% for Tier 3. On a smoothed, actuarial value of
assets basis, the average return was 7.9% for Tiers 1 and 2 and 9.2% for Tier 3. The returns exceeded the 2024
assumed earnings rate for Tiers 1 and 2 of 7.2% and the 2024 assumed earnings rate for Tier 3 of 7.0%.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
7
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 the 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, with key sources of loss coming from inactive
mortality, actual COLAs, and other data changes.
Additional Contribution – Monies contributed in excess of the required contribution rate in order to pay down
the unfunded liability.
Assumption / Method Change – The Board continued the decrease in the payroll growth assumption from
1.50% to 0.75%.
Compensation Limit Update – The Tier 3 compensation limit was updated, as scheduled, with a sizable
increase over expectation.
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. Tier 3 members were also impacted by
the increase in the compensation limit.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
8
CONTRIBUTION RESULTS
DEVELOPMENT OF EMPLOYER CONTRIBUTIONS – TIERS 1 & 2 MEMBERS
Valuation Date
June 30, 2025
June 30, 2024
Applicable to Fiscal Year Ending
2027
2026
Rate
Dollar
Rate
Dollar
PENSION
Normal Cost
Total Normal Cost
21.92%
$ 10,594,855
21.21%
$ 12,264,000
Employee Cost
(7.65%)
(3,697,566)
(7.65%)
(4,423,366)
Employer (Net) Normal Cost
14.27%
6,897,289
13.56%
7,840,634
Amortization of Unfunded Liability
45.97%
22,219,229
44.60%
25,788,515
Total Employer Cost (Pension)
60.24%
29,116,518
58.16%
33,629,149
HEALTH
Normal Cost
0.33%
159,503
0.31%
179,248
Amortization of Unfunded Liability
1.18%
570,343
1.02%
589,782
Total Employer Cost (Health)
1.51%
729,846
1.33%
769,030
Total Employer Cost (Pension + Health)
61.75%
29,846,364
59.49%
34,398,179
Alternate Contribution Rate (ACR) 1
47.15%
45.62%
Underlying Payroll (as of valuation date)
47,974,385
56,967,273
The results above are based on the current amortization schedule approved by the Board of Trustees for your
individual plan (see "Actuarial Assumptions and Methods").
1 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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
9
DEVELOPMENT OF EMPLOYER CONTRIBUTIONS – TIER 3 DEFINED BENEFIT (DB) MEMBERS
Valuation Date
June 30, 2025
June 30, 2024
Applicable to Fiscal Year Ending
2027
2026
Rate
Dollar
Rate
Dollar
PENSION
Total Normal Cost
16.98%
$ 6,522,738
15.91%
$ 5,314,126
Amortization of Unfunded Liability
0.00%
0
0.00%
0
Total Pension Cost
16.98%
6,522,738
15.91%
5,314,126
HEALTH
Total Normal Cost
0.16%
61,463
0.17%
56,782
Amortization of Unfunded Liability
0.00%
0
0.00%
0
Total Health Cost
0.16%
61,463
0.17%
56,782
TOTAL
Calculated Tier 3 Required EE/ER Individual Cost
8.57%
3,292,101
8.05%
2,685,454
Funding Policy Tier 3 Required EE/ER Individual
Cost 1
8.33%
3,199,906
8.33%
2,782,317
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities 2
47.15%
18,112,314
45.62%
15,237,612
Funding Policy Tier 3 ER Defined Benefit Cost
55.48%
21,312,220
53.95%
18,019,930
Underlying Payroll (as of valuation date)
38,128,278
32,907,554
1 The “Funding Policy” cost was adopted in 2023 and first reflected in the June 30, 2023 valuation. This cost is a 3-year
rolling average of the actual calculated costs. The total cost is split equally between employer and employee, in
compliance with state statutes. Note that pension and health monies are split differently for the two parties based on
IRS requirements. More information on this breakout is included in the “Historical Summary of Rates”.
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, 2025 – Mesa Police Dept. (018)
10
DEVELOPMENT OF CONTRIBUTIONS – TIER 3 DEFINED CONTRIBUTION (DC) MEMBERS
Valuation Date
June 30, 2025
June 30, 2024
Applicable to Fiscal Year Ending
2027
2026
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%
$ 42,952
9.00%
$ 21,748
Employee Health Subsidy Program Cost
0.18%
859
0.20%
483
Employee Disability Program Cost
1.60%
7,636
1.54%
3,721
Total Employee Cost
10.78%
51,447
10.74%
25,952
Employer Cost
9.00%
42,952
9.00%
21,748
Employer Health Subsidy Program Cost
0.18%
859
0.20%
483
Employer Disability Program Cost
1.60%
7,636
1.54%
3,721
Total Employer Cost (before Legacy)
10.78%
51,447
10.74%
25,952
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities 2
47.15%
225,020
45.62%
110,238
Total Employer Cost (with Legacy)
57.93%
276,467
56.36%
136,190
Underlying Payroll (as of valuation date)
473,689
238,073
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, 2025 – Mesa Police Dept. (018)
11
CONTRIBUTION RATE SUMMARY
Tier 1
Tier 2
Tier 3
Membership Date On or After
7/1/1968
1/1/2012
7/1/2017
Participates in Social Security
N/A
Yes
No
Yes
No
N/A
Available Retirement Plan 1
DB Only
DB Only
Hybrid
DB Only
Hybrid
DC Only
EMPLOYEE CONTRIBUTION RATE
PSPRS DB Rate
7.65%
7.65%
7.65%
8.33%
8.33%
PSPRS DC Rate
3.00%
3.00%
9.00%
Employer Health Subsidy Program Cost
0.18%
PSPDCRP Disability Program Rate
1.60%
Total EE Contribution Rate
7.65%
7.65%
10.65%
8.33%
11.33%
10.78%
EMPLOYER CONTRIBUTION RATE
PSPRS DB Normal Cost
14.60%
14.60%
14.60%
8.33%
8.33%
PSPRS DB Tier 1 & 2 Legacy Cost 2
47.15%
47.15%
47.15%
47.15%
47.15%
47.15%
PSPRS DC Rate
3.00%
3.00%
9.00%
Employer Health Subsidy Program Cost
0.18%
PSPDCRP Disability Program Rate
1.60%
Total ER Contribution Rate
61.75%
61.75%
64.75%
55.48%
58.48%
57.93%
Employer Alternate Contribution Rate 3
47.15%
47.15%
47.15%
47.15%
47.15%
47.15%
Exhibit summarizes employee and employer contributions based on Statute and the results of June 30, 2025
actuarial valuation. Pension and health components are combined, where applicable.
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 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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
12
IMPACT OF ADDITIONAL CONTRIBUTIONS
Additional Contribution (000s)
Impact On
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Funded Status - June 30, 2025
56.5%
57.5%
58.4%
59.3%
60.3%
61.2%
62.1%
63.1%
64.0%
64.9%
65.9%
FYE 2027 Contribution Rate
60.24%
59.24%
58.23%
57.23%
56.23%
55.23%
54.22%
53.22%
52.22%
51.21%
50.21%
Table shows the hypothetical change in the funded status and contribution rate from the June 30, 2025 actuarial valuation results for Tiers 1 & 2 if
an additional contribution of the amount shown had been made to the Fund on June 30, 2025. This illustration can help estimate the impact of
contributing additional monies to the fund in the future.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2025 – Mesa Police Dept. (018)
13
HISTORICAL SUMMARY OF 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
2021
2023
13.61%
45.15%
58.76%
0.40%
1.08%
1.48%
(Employer)
2022
2024
13.61%
45.03%
58.64%
0.39%
1.12%
1.51%
2023
2025
13.94%
47.28%
61.22%
0.36%
1.14%
1.50%
2024
2026
13.56%
44.60%
58.16%
0.31%
1.02%
1.33%
2025
2027
14.27%
45.97%
60.24%
0.33%
1.18%
1.51%
TIER 3 1
2021
2023
10.02%
0.00%
10.02%
0.21%
0.00%
0.21%
(Employer)
2022
2024
9.11%
0.00%
9.11%
0.21%
0.00%
0.21%
2023
2025
8.57%
0.00%
8.57%
0.10%
0.00%
0.10%
2024
2026
8.14%
0.00%
8.14%
0.19%
0.00%
0.19%
2025
2027
8.16%
0.00%
8.16%
0.17%
0.00%
0.17%
TIER 3
2021
2023
10.02%
0.00%
10.02%
0.21%
0.00%
0.21%
(Employee)
2022
2024
9.11%
0.00%
9.11%
0.21%
0.00%
0.21%
2023
2025
8.57%
0.00%
8.57%
0.10%
0.00%
0.10%
2024
2026
8.33%
0.00%
8.33%
0.00%
0.00%
0.00%
2025
2027
8.33%
0.00%
8.33%
0.00%
0.00%
0.00%
1 All Tier 3 rates shown (employer and employee) are Board approved Funding Policy rates. Starting in 2023, these rates are a 3-year rolling average of calculated
EE/ER rates. Does not reflect Legacy costs that the employer must also contribute.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
14
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, 2025
June 30, 2024
PENSION
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 680,329,102
$ 647,068,352
DROP Members
156,763,537
145,458,796
Vested Members
4,040,115
2,561,613
Active Members
307,612,524
358,552,375
Total Actuarial Present Value of Benefits
1,148,745,278
1,153,641,136
Actuarial Accrued Liability (AAL)
All Inactive Members
841,132,754
795,088,761
Active Members
230,926,242
268,551,902
Total Actuarial Accrued Liability
1,072,058,996
1,063,640,663
Actuarial Value of Assets (AVA)
606,139,744
557,427,131
Unfunded Actuarial Accrued Liability
465,919,252
506,213,532
PVB Funded Ratio (AVA / PVB)
52.8%
48.3%
AAL Funded Ratio (AVA / AAL)
56.5%
52.4%
HEALTH
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 17,577,252
$ 16,967,627
DROP Members
2,158,694
2,188,023
Active Members
4,323,134
4,740,188
Total Present Value of Benefits
24,059,080
23,895,838
Actuarial Accrued Liability (AAL)
All Inactive Members
19,735,946
19,155,650
Active Members
3,291,048
3,560,992
Total Actuarial Accrued Liability
23,026,994
22,716,642
Actuarial Value of Assets (AVA)
11,133,742
10,947,490
Unfunded Actuarial Accrued Liability
11,893,252
11,769,152
PVB Funded Ratio (AVA / PVB)
46.3%
45.8%
AAL Funded Ratio (AVA / AAL)
48.4%
48.2%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
15
LIABILITIES AND FUNDED RATIOS BY BENEFIT - TIER 3
June 30, 2025
June 30, 2024
PENSION
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 672,375
$ 0
Vested Members
941,275
644,924
Active Members
109,785,680
76,998,432
Total Actuarial Present Value of Benefits
111,399,330
77,643,356
Actuarial Accrued Liability (AAL)
All Inactive Members
1,613,650
644,924
Active Members
23,280,044
16,284,849
Total Actuarial Accrued Liability
24,893,694
16,929,773
Actuarial Value of Assets (AVA)
26,469,650
18,840,617
Unfunded Actuarial Accrued Liability
(1,575,956)
(1,910,844)
PVB Funded Ratio (AVA / PVB)
23.8%
24.3%
AAL Funded Ratio (AVA / AAL)
106.3%
111.3%
HEALTH
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 25,139
$ 0
Active Members
1,064,121
863,243
Total Present Value of Benefits
1,089,260
863,243
Actuarial Accrued Liability (AAL)
All Inactive Members
25,139
0
Active Members
260,904
205,485
Total Actuarial Accrued Liability
286,043
205,485
Actuarial Value of Assets (AVA)
868,091
729,765
Unfunded Actuarial Accrued Liability
(582,048)
(524,280)
PVB Funded Ratio (AVA / PVB)
79.7%
84.5%
AAL Funded Ratio (AVA / AAL)
303.5%
355.1%
The liabilities shown on this page are the liabilities for Mesa Police Dept. Tier 3 members.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
16
DERIVATION OF EXPERIENCE (GAIN)/LOSS
Tiers 1 & 2
Tier 3
Pension
Health
Pension
Health
(1)
Unfunded Actuarial Accrued Liability as of June 30, 2024
506,213,532
11,769,152
(1,910,844)
(524,280)
(2)
Normal Cost Developed in Last Valuation
7,840,634
179,248
2,658,733
30,061
(3)
Actual Contributions
58,090,553
1,115,658
2,860,417
67,338
(4)
Expected Interest On (1), (2), and (3)
34,956,986
820,819
(47,337)
(37,966)
(5)
Expected Unfunded Actuarial Accrued Liability as of June
30, 2025: (1)+(2)-(3)+(4)
490,920,599
11,653,561
(2,159,865)
(599,523)
(6)
Changes to UAAL Due to Assumptions, Methods and
Benefits
0
0
0
0
(7)
Change to UAAL Due to Actuarial (Gain)/Loss
(25,001,347)
239,691
583,909
17,475
(8)
Unfunded Actuarial Accrued Liability as of June 30, 2025
465,919,252
11,893,252
(1,575,956)
(582,048)
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
17
AMORTIZATION OF UNFUNDED LIABILITIES - TIERS 1 & 2
Date Established
Outstanding Balance
Years Remaining
Amortization Rate
PENSION
6/30/2019
369,612,219
21
36.24%
6/30/2021
16,170,998
21
1.63%
6/30/2022
18,529,189
21
1.87%
6/30/2023
39,070,735
21
3.95%
6/30/2024
38,982,287
21
3.94%
6/30/2025
(16,446,176)
21
(1.66%)
Total
465,919,252
45.97%
HEALTH
6/30/2019
9,212,536
21
0.90%
6/30/2021
1,021,241
21
0.10%
6/30/2022
559,282
21
0.06%
6/30/2023
453,396
21
0.05%
6/30/2024
248,489
21
0.03%
6/30/2025
398,308
21
0.04%
Total
11,893,252
1.18%
AMORTIZATION OF UNFUNDED LIABILITIES - TIER 3
Date Established
Outstanding Balance
Years Remaining
Amortization Rate 1
PENSION
6/30/2018
741
3
0.00%
6/30/2019
(162,067)
4
(0.12%)
6/30/2020
181,017
5
0.11%
6/30/2021
(249,043)
6
(0.13%)
6/30/2022
(386,146)
7
(0.18%)
6/30/2023
(548,423)
8
(0.23%)
6/30/2024
(573,499)
9
(0.22%)
6/30/2025
161,464
10
0.06%
Total
(1,575,956)
0.00%
HEALTH
6/30/2018
(49)
3
0.00%
6/30/2019
(13,323)
4
(0.01%)
6/30/2020
(46,670)
5
(0.03%)
6/30/2021
(129,198)
6
(0.07%)
6/30/2022
(65,184)
7
(0.03%)
6/30/2023
(83,667)
8
(0.03%)
6/30/2024
(133,806)
9
(0.05%)
6/30/2025
(110,151)
10
(0.04%)
Total
(582,048)
0.00%
1 By Statute, negative total amortization rates are not subtracted in Tier 3 rate calculations.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
18
ASSET SUPPORT
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR YEAR ENDED JUNE 30, 2025
Tiers 1 & 2
Tier 3
Pension
Health
Pension
Health
ADDITIONS
Contributions
Member Contributions
$ 108,640,873
$ 0
$ 61,005,633
$ 0
Employer Contributions
1,069,823,308
0
59,252,766
0
Health Insurance Contributions
0
4,098,668
0
1,553,978
Total Contributions
1,178,464,181
4,098,668
120,258,399
1,553,978
Investment Income
Net Increase in Fair Value
1,390,120,909
34,877,805
45,105,036
1,105,501
Interest and Dividends
259,062,270
6,499,811
8,405,753
206,021
Other Income
150,210,467
3,767,860
4,873,856
119,427
Less Investment Expenses
(35,364,426)
(728,394)
(1,147,464)
(23,087)
Net Investment Income
1,764,029,220
44,417,082
57,237,181
1,407,862
Non-investment Income
0
0
0
0
Transfers In
288,360
0
206,733
0
Total Additions
2,942,781,761
48,515,750
177,702,313
2,961,840
DEDUCTIONS
Distributions to Members
Benefit Payments
1,218,594,305
0
852,434
0
Health Insurance Subsidy
0
18,660,709
0
6,480
Refund of Contributions
12,178,168
0
2,803,612
0
Total Distributions
1,230,772,473
18,660,709
3,656,046
6,480
Administrative Expenses
7,838,369
201,658
254,475
6,392
Transfers Out
67,338
0
0
0
Other
0
0
0
0
Total Deductions
1,238,678,180
18,862,367
3,910,521
12,872
NET INCREASE / (DECREASE)
1,704,103,581
29,653,383
173,791,792
2,948,968
NET POSITION HELD IN TRUST
Prior Valuation
15,933,751,686
411,840,936
398,698,171
11,044,818
Beginning of the Year Adjustment
0
0
0
0
End of the Year
17,637,855,267
441,494,319
572,489,963
13,993,786
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
19
DEVELOPMENT OF PENSION ACTUARIAL VALUE OF ASSETS - TIERS 1 & 2
Year Ended June 30
B. Amortization Schedule
2025
2026
2027
2028
2029
2030
2031
2025 Experience (A3 / 7)
87,257,612
87,257,612
87,257,612
87,257,612
87,257,612
87,257,612
87,257,610
2024 Experience
62,439,795
62,439,795
62,439,795
62,439,795
62,439,795
62,439,792
2023 Experience
10,197,720
10,197,720
10,197,720
10,197,720
10,197,717
2022 Experience
(204,451,249)
(204,451,249)
(204,451,249)
(204,451,249)
2021 Experience
238,978,744
238,978,744
238,978,745
2020 Experience
(68,882,158)
(68,882,160)
2019 Experience
(22,859,275)
Total Amortization
102,681,189
125,540,462
194,422,623
(44,556,122)
159,895,124
149,697,404
87,257,610
D. Rates of Return
D1. Market Value Rate of Return
11.0%
D2. Actuarial Value Rate of Return
7.9%
A. Investment Income
A1. Actual Investment Income
$ 1,756,190,851
A2. Expected Amount for Immediate Recognition
1,145,387,569
A3. Amount Subject to Amortization
610,803,282
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2024
15,769,616,678
C2. Non-investment Net Cash Flow
(52,087,270)
C3. Preliminary Actuarial Value of Assets, June 30, 2025: (A2 + B + C1 + C2)
16,965,598,166
C4. Market Value of Assets, June 30, 2025
17,637,855,267
630,157,863
C5. Final Actuarial Value of Assets, June 30, 2025 (C3 Within 20% Corridor of C4)
16,965,598,166
606,139,744
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
20
DEVELOPMENT OF HEALTH ACTUARIAL VALUE OF ASSETS - TIERS 1 & 2
Year Ended June 30
B. Amortization Schedule
2025
2026
2027
2028
2029
2030
2031
2025 Experience (A3 / 7)
2,154,000
2,154,000
2,154,000
2,154,000
2,154,000
2,154,000
2,153,999
2024 Experience
1,556,610
1,556,610
1,556,610
1,556,610
1,556,610
1,556,608
2023 Experience
193,035
193,035
193,035
193,035
193,036
2022 Experience
(6,416,469)
(6,416,469)
(6,416,469)
(6,416,471)
2021 Experience
9,257,478
9,257,478
9,257,481
2020 Experience
(2,898,713)
(2,898,716)
2019 Experience
(1,075,572)
Total Amortization
2,770,369
3,845,938
6,744,657
(2,512,826)
3,903,646
3,710,608
2,153,999
D. Rates of Return
D1. Market Value Rate of Return
10.9%
D2. Actuarial Value Rate of Return
8.0%
A. Investment Income
A1. Actual Investment Income
$ 44,215,424
A2. Expected Amount for Immediate Recognition
29,137,425
A3. Amount Subject to Amortization
15,077,999
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2024
406,302,544
C2. Non-investment Net Cash Flow
(14,562,041)
C3. Preliminary Actuarial Value of Assets, June 30, 2025: (A2 + B + C1 + C2)
423,648,297
C4. Market Value of Assets, June 30, 2025
441,494,319
11,602,747
C5. Final Actuarial Value of Assets, June 30, 2025 (C3 Within 20% Corridor of C4)
423,648,297
11,133,742
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
21
DEVELOPMENT OF PENSION ACTUARIAL VALUE OF ASSETS - TIERS 3
Year Ended June 30
B. Amortization Schedule
2025
2026
2027
2028
2029
2025 Experience (A3 / 5)
5,010,932
5,010,932
5,010,932
5,010,932
5,010,934
2024 Experience
3,027,823
3,027,823
3,027,823
3,027,823
2023 Experience
885,521
885,521
885,520
2022 Experience
(3,259,379)
(3,259,381)
2021 Experience
3,551,938
Total Amortization
9,216,835
5,664,895
8,924,275
8,038,755
5,010,934
D. Rates of Return
D1. Market Value Rate of Return
12.5%
D2. Actuarial Value Rate of Return
9.2%
A. Investment Income
A1. Actual Investment Income
$ 56,982,706
A2. Expected Amount for Immediate Recognition
31,928,044
A3. Amount Subject to Amortization
25,054,662
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2024
386,897,139
C2. Non-investment Net Cash Flow
116,809,086
C3. Preliminary Actuarial Value of Assets, June 30, 2025: (A2 + B + C1 + C2)
544,851,104
C4. Market Value of Assets, June 30, 2025
572,489,963
27,812,386
C5. Final Actuarial Value of Assets, June 30, 2025 (C3 Within 20% Corridor of C4)
544,851,104
26,469,650
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
22
DEVELOPMENT OF HEALTH ACTUARIAL VALUE OF ASSETS - TIERS 3
Year Ended June 30
B. Amortization Schedule
2025
2026
2027
2028
2029
2025 Experience (A3 / 5)
115,017
115,017
115,017
115,017
115,018
2024 Experience
84,292
84,292
84,292
84,290
2023 Experience
23,872
23,872
23,870
2022 Experience
(101,792)
(101,790)
2021 Experience
128,961
Total Amortization
250,350
121,391
223,179
199,307
115,018
D. Rates of Return
D1. Market Value Rate of Return
11.9%
D2. Actuarial Value Rate of Return
9.4%
A. Investment Income
A1. Actual Investment Income
$ 1,401,470
A2. Expected Amount for Immediate Recognition
826,384
A3. Amount Subject to Amortization
575,086
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2024
10,710,659
C2. Non-investment Net Cash Flow
1,547,498
C3. Preliminary Actuarial Value of Assets, June 30, 2025: (A2 + B + C1 + C2)
13,334,891
C4. Market Value of Assets, June 30, 2025
13,993,786
910,985
C5. Final Actuarial Value of Assets, June 30, 2025 (C3 Within 20% Corridor of C4)
13,334,891
868,091
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
23
MEMBER STATISTICS
STATISTICAL DATA – ACTIVE MEMBERS
June 30, 2025
June 30, 2024
Tiers 1 & 2
Tier 3
Tiers 1 & 2
Tier 3
ACTIVES
Number
344
377
385
321
Average Current Age
43.6
29.9
43.0
29.6
Average Age at Employment
27.8
26.8
27.7
26.8
Average Past Service
15.8
3.1
15.3
2.8
Average Annual Salary
$128,071
$91,526
$137,246
$95,499
ACTIVES (TRANSFERRED)
Number
16
10
17
8
Average Current Age
37.0
30.4
36.2
31.0
Average Age at Employment
27.1
25.7
27.0
26.3
Average Past Service
9.9
4.7
9.2
4.7
Average Annual Salary
$112,864
$88,321
$112,755
$86,749
Total Number (Active)
360
387
402
329
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
24
STATISTICAL DATA – INACTIVE MEMBERS
June 30, 2025
June 30, 2024
Tiers 1 & 2
Tier 3
Tiers 1 & 2
Tier 3
RETIREES
Number
539
1
513
0
Average Current Age
62.4
0.1
62.1
N/A
Average Annual Benefit
$64,629
$39,315
$63,524
N/A
DROP RETIREES
Number
115
N/A
117
N/A
Average Current Age
53.0
N/A
52.7
N/A
Average Annual Benefit
$73,026
N/A
$67,059
N/A
BENEFICIARIES
Number
56
0
57
0
Average Current Age
66.1
N/A
65.5
N/A
Average Annual Benefit
$52,353
N/A
$50,563
N/A
DISABILITY RETIREES
Number
197
0
194
0
Average Current Age
57.6
N/A
56.9
N/A
Average Annual Benefit
$53,758
N/A
$52,740
N/A
INACTIVE / VESTED
Number
103
100
96
79
Average Current Age
41.7
32.0
40.4
31.7
Average Accumulated
Contributions
$20,055
$8,158
$13,695
$7,242
TOTAL NUMBER (INACTIVE)
1,010
101
977
79
FORMER MEMBERS (TRANSFERRED)
13
26
13
20
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
25
ACTIVE AGE, SERVICE AND PAY DISTRIBUTIONS – 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
0
0
0
0
0
0
0
0
0
30 - 34
0
31
21
0
0
0
0
52
6,141,554
118,107
35 - 39
0
12
54
14
0
0
0
80
10,174,076
127,176
40 - 44
0
12
28
33
11
0
0
84
10,785,541
128,399
45 - 49
0
1
17
36
26
5
0
85
11,590,763
136,362
50 - 54
0
2
4
12
6
8
1
33
4,084,840
123,783
55 - 59
0
1
1
10
3
2
1
18
2,121,201
117,845
60 - 64
0
0
0
6
2
0
0
8
964,423
120,553
65+
0
0
0
0
0
0
0
0
0
0
Total
0
59
125
111
48
15
2
360
45,862,398
127,396
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
26
ACTIVE AGE, SERVICE AND PAY DISTRIBUTIONS – 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
65
0
0
0
0
0
0
65
5,216,319
80,251
25 - 29
130
26
0
0
0
0
0
156
14,201,844
91,037
30 - 34
66
39
0
0
0
0
0
105
10,076,809
95,970
35 - 39
20
23
0
0
0
0
0
43
4,129,305
96,030
40 - 44
8
7
0
0
0
0
0
15
1,467,284
97,819
45 - 49
1
1
0
0
0
0
0
2
186,453
93,227
50 - 54
1
0
0
0
0
0
0
1
110,587
110,587
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
291
96
0
0
0
0
0
387
35,388,601
91,443
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
27
AGE DISTRIBUTIONS – INACTIVE MEMBERS
Retirees, Disableds and
Beneficiaries
Age
Count
Average Annual
Pensions
<40
10
37,466
40-45
23
52,286
45-49
56
52,012
50-54
127
57,011
55-59
158
58,963
60-64
139
64,238
65-69
117
63,064
70-74
91
68,872
75-79
55
65,400
80-84
10
72,893
85-89
6
64,965
90-94
0
0
95-99
1
59,164
100+
0
0
Total
793
61,029
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
28
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.
Mortality Rate
Active Lives:
PubS-2010 Employee mortality, adjusted by a factor of 1.03 for male
members and 1.08 for female members, with generational
improvements 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
improvements 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
beneficiaries, with generational improvements using 85% of the
most recent projection scale (currently Scale MP-2021).
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:
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
29
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.
65% are assumed to enter the DROP program while the remaining
35% are assumed to retire and commence benefits immediately.
DROP periods are assumed to be 5 years in length for future DROP
elections.
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.
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.
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.
Inflation
2.50%.
Tier 3 Compensation Limit
$140,952 for calendar 2024. Assumed increases of 2.00% per year
thereafter.
Cost-of-Living Adjustment
1.85%.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
30
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.
Marital Status
For active members, 85% of males and 60% of females are assumed to be
married. Actual marital status is used, where applicable, for inactive
members.
Spouse’s Age
Males are assumed to be three years older than females.
Benefit Commencement
Deferred members are assumed to commence benefits as follows:
Tier 1: immediate refund of contributions
Tiers 2 & 3 (less than 15 years service): immediate refund of
contributions
Tier 2 (15+ years service): life annuity payable at age 52.5
Tier 3 (15+ years service): life annuity payable at age 55
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
Each year the assumed investment income is recognized in full while
the difference between actual and assumed investment income are
smoothed over a fixed period (7 years for Tiers 1 & 2; 5 years for
Tier 3). Actuarial Assets shall not be less than 80% nor greater than
120% of the Market Value of Assets. 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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
31
Amortization Method
See Funding Policy for complete details. In short:
Tiers 1 & 2:
Any positive UAAL (assets less than funding policy targets) is
amortized using a layered approach according to a Level
Dollar method over a closed period of 15 years (phased into
from current period).
Any negative UAAL (assets greater than funding policy
targets) is amortized according to a Level Dollar method
over an open period of 10 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
0.75% per year. This is the annual increase expected on total
employer payroll.
CHANGES SINCE THE PRIOR VALUATION
The payroll growth assumption was lowered from 1.50% to 0.75%.
There were no method changes since the prior valuation.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
32
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 as of June 30, 2025 - Mesa Police Dept. (018)
33
Service
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire
Pima
Fire
Other
Fire
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%
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
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 as of June 30, 2025 - Mesa Police Dept. (018)
34
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 as of June 30, 2025 - Mesa Police Dept. (018)
35
PLAN PROVISIONS
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 1: Hired before January 1, 2012
Tier 2: Hired on or after January 1, 2012 but before July 1, 2017
Tier 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: The highest compensation paid to member during three
Compensation
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.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
36
Normal Retirement
Date
Tier 1: First day of month following attainment of 1) 20 years of service
or 2) 62nd birthday and completion of 15 years of service.
Tier 2: First day of month following the attainment of age 52.5 and
completion of 15 years of service.
Tier 3: First day of month following the attainment of age 55 and
completion 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 as of June 30, 2025 - Mesa Police Dept. (018)
37
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.
Form of Benefit
Same as Normal Retirement
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 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
Payable following death of active member
Service Incurred
100% of Average Monthly Benefit Compensation, reduced by child’s
pension.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
38
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).
Accumulated Contributions
Any contributions remaining upon the death of the last beneficiary
shall be paid as a lump sum.
Vesting (Termination)
Vesting Service Requirement
Tier 1: 10 years.
Tiers 2 & 3: 15 years.
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
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
39
payment is made on July 1, 2018, with annual adjustments effective
every July 1 thereafter. Adjustment does not apply while in DROP.
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 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%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
40
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
Post-Retirement Health Insurance Subsidy
Eligibility
Retired member or survivor who elect health coverage provided by
the state or participating employer.
Maximum Subsidy Amounts (monthly)
Member Only
With Dependents
Medicare Eligible
$100
$170
One w/ Medicare
N/A
$215
Not Medicare Eligible
$150
$260
Contributions
Employee
Tiers 1 & 2: 7.65% (effective July 1, 2023).
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
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).
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 SINCE THE PRIOR VALUATION
None.
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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 Arizona Revised Statutes (ARS). Those
benefits defined in ARS are to be equitably managed and administered by the Arizona Public Safety Personnel
Retirement System (PSPRS agency).
This Actuarial Funding Policy identifies the funding objectives and elements of the actuarial funding policy set
by the Board for the PSPRS agency. The Board adopted this Funding Policy to help ensure the systematic
funding of future benefit payments for members of the retirement systems as established by the legislature.
This policy covers all retirements systems administered by the Board: The Public Safety Personnel Retirement
System (PSPRS); the Correction Officers Retirement Plan (CORP); and the Elected Officials Retirement Plan
(EORP).
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 2025.
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 Accrued 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.
Arizona Public Safety Personnel Retirement System
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2. Maintain public policy goals of accountability and transparency through stakeholder communication and
education. Each policy element is clear in intent and effect, and each should be considered in a balanced
approach to determine how and when the funding requirements of the plan will be met.
a. Corollary 2a: Board shall provide stakeholders with separate reports and tools to help explain
current results as well as to help model future funding requirements.
3. Promote intergenerational equity. Defined benefit pensions are designed with a long-term perspective
and designed to minimize contribution volatility that cannot avoid some level of generational cost shift.
However, the goal is that each generation of members and employers (taxpayers) should, to the extent
possible, incur the cost of benefits for the employees who provide services to them, rather than shifting
those costs to other generations of members and employers (taxpayers).
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 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 five years (Tier 3) or seven years (Tiers 1 and 2) in calculating the Actuarial Value of
Assets (AVA).
b. The AVA so determined shall be subject to a 20% corridor relative to the Market Value of Assets
(MVA).
3. Amortization Method (Unfunded Amounts)
a. The AVA is 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
6/30/2019 actuarial valuation will become the initial layer for each employer beginning with the
6/30/2020 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 PSPRS Unfunded Liability will be
decreased by 0.75% each year with the intention of ultimately achieving 0.0%.
Arizona Public Safety Personnel Retirement System
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ii. The payroll growth rate used to amortize the Correction Officers Retirement Plan (CORP)
Unfunded Liability 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)
Unfunded Liability will be 0.0%.
c. Gains and losses, for EORP and Tiers 1 & 2 for both PSPRS and CORP, for each employer beginning
with the 6/30/2020 actuarial valuation will be amortized as a new layer over the same
amortization period as the regular unfunded liability to a minimum of 15 years. Once the
amortization period for each employer decreases to 15 years, each subsequent year’s gains and
losses will be amortized as a new 15-year closed layer.
i. The payroll growth rate used to amortize the 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 AVA is 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.
5. Tier 3 Rate Calculation
a. Tier 3 is distinct from Tiers 1 & 2 in PSPRS and CORP as the contributions are a shared percentage
(50/50 split for PSPRS: for CORP, employer 1/3 and member 2/3 of the normal cost plus 50 percent
each, member and employer, of the UAAL amortization) for employers and members based on
the actuarially calculated rate. To reduce the impact of volatility to rates, the Tier 3 rates will be
smoothed over a 3-year rolling period based on the actuarially calculated rates for each year’s
actuarial valuation.
i. Beginning with the 6/30/2023 valuation, the prospective Tier 3 rates set by the Board of
Trustees are planned to be a rolling average of the actuarial calculated Tier 3 rates using
the 6/30/2023, 6/30/2022 and 6/30/2021 rates in the initial process.
ii. As assumptions may be updated year-to-year, the prior calculated rates are not updated
for those changes, the prior calculated rates are used to smooth in the new rates.
b. At the May 2023 Board Meeting, the Board changed the assumed rate of return for CORP Tier 3,
which was at 7.2%, to match the 7.0% assumed rate of return for PSPRS Tier 3. The Board
committed to continue to monitor market conditions and directions with the intent to ultimately
adopt a single assumed rate of return for all investments for retirement systems/plans
administered by PSPRS agency.
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6. Assumed Rate of Return (ARR)
a. At the May 2023 Board Meeting, the Board changed the assumed rate of return for CORP Tier 3,
which was at 7.2%, to match the 7.0% assumed rate of return for PSPRS Tier 3. The Board will
continue to monitor market conditions and directions with the intent to ultimately adopt a single
assumed rate of return for all investments for retirement systems/plans administered by PSPRS
agency.
7. EORP Floor Considerations
a. Establish a “floor” for EORP based on the immediately previous valuation by adjusting payroll
growth, amortization periods of the original layer or other possible options, to improve funding
in maintaining contribution levels opposed to reducing employer contributions.
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 MVA, 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.
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4. Timely Recognition of Costs (Corollary 3a)
a. Metric: Has the percentage of unfunded liability subject to negative amortization decreased over a
five-year lookback period?
b. Measurement: History of unfunded liability subject to negative amortization as a percentage of total
unfunded liability will be tracked.
c. Action Plan: If the answer is no, and not readily explainable (e.g., adopted assumption changes being
phased in are anticipated to address negative amortization), a review of the reason(s) for negative
amortization should be researched and presented to the Advisory Committee to provide a
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 as of June 30, 2025 - Mesa Police Dept. (018)
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SUPPLEMENTARY INFORMATION
GLOSSARY
Accrued Benefit
The benefit earned as of a specific date based on the provisions of
the plan and the member’s age, service, and salary as of that date.
Actuarial Accrued Liability
The portion of the anticipated future benefits allocated to years
prior to the valuation date determined according to the plan’s
Actuarial Cost Method.
Actuarial Value of Assets
The asset value used in the valuation to determine contribution
requirements. It represents the plan’s Market Value of Assets (see
below), with adjustments according to the plan’s Actuarial Asset
Method. These adjustments produce a “smoothed” value that is
likely to be less volatile from year to year than the Market Value of
Assets.
Actuarial Assumptions
Assumptions regarding the occurrence of future events affecting
plan costs. These assumptions include rates of investment earnings,
changes in compensation, 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 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 to ensure the plan is
adequately and systematically funded.
Actuarial Gain or Loss
The change in Unfunded Actuarial Accrued Liability resulting from
experience different from Actuarial Assumptions. Gains decrease
the Unfunded Actuarial Accrued Liability and losses increase the
Unfunded Actuarial Accrued Liability.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
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Actuarial Present Value
The estimated 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.
Amortization Payment
The portion of the 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.
Decrements
Events which result in the termination of membership in the system
such as retirement, disability, withdrawal, or death.
Entry Age Normal Cost Method
Under this method, the normal cost is the sum of the individual
normal costs for all active participants. For an active participant,
the normal cost is the participant’s normal cost accrual rate,
multiplied by the participant’s current compensation.
The normal cost accrual rate equals:
(i) the present value of future benefits for the participant,
determined as of the participant’s entry
age, divided by
(ii) the present value of the compensation expected to be paid to
the participant for each year of the participant’s anticipated future
service, determined as of the participant’s entry age.
In calculating the present value of future compensation, the salary
scale is applied both retrospectively and prospectively to estimate
compensation in years prior to and subsequent to the valuation
year based on the compensation used for the valuation.
The accrued liability is the sum of the individual accrued liabilities
for all participants and beneficiaries. A participant’s accrued liability
equals the present value, at the participant’s attained age, of future
benefits less the present value at the participant’s attained age of
the individual normal costs payable in the future. A beneficiary’s
accrued liability equals the present value, at the beneficiary’s
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
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attained age, of future benefits. The unfunded accrued liability
equals the total accrued liability less the actuarial value of assets.
Under this method, the entry age used for each active participant is
the participant’s age at the time he or she would have commenced
participation if the plan had always been in existence under current
terms, or the age as of which he or she first earns service credits for
purposes of benefit accrual under the current terms of the plan.
Funded Ratio
A measure of the ratio of the plan 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 Actuarial Cost Method used to determine the liabilities.
Interest Rate
The assumed long-term rate of return on plan assets.
Market Value of Assets
The fair market value of plan assets as of the valuation date.
Normal Cost
The current year's cost for benefits yet to be funded. Under the
Entry Age Normal cost method, it is determined for each participant
as the present value of future benefits, determined as of the
Member’s entry age, amortized as a level percentage of
compensation over the anticipated number of years of
participation, determined as of the entry age.
Present Value of Benefits
The single sum value on the valuation date of all future benefits to
be paid to current plan participants.
Projected Annual Payroll
The projected annual rate of pay for the fiscal year following the
fiscal year beginning on the valuation date of all covered Members.
Projected Benefits
The benefits expected to be paid in the future based on the
provisions of the plan and the Actuarial Assumptions. The projected
values are based on anticipated future advancement in age and
accrual of service as well as increases in salary paid to the
participant.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
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Total Annual Payroll
The projected annual rate of pay for the fiscal year beginning on the
valuation date of all covered Members.
Ultimate Cost
The total cost to the plan once the last benefit has been paid. The
Ultimate Cost equals
Benefit Payments
Plus: Expenses
Less: Investment Income
The Ultimate Cost is independent of the Actuarial Cost Method
selected.
Unfunded Actuarial Accrued
The difference between the Actuarial Accrued Liability and the
Liability
Actuarial Value of Assets. Under the Entry Age Normal Actuarial
Cost Method, an actuarial gain or loss, based on actual versus
expected UAAL, is determined in conjunction with each valuation
of the plan.
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Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
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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 using various actuarial assumptions. 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. It is 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 increases less
than 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
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
51
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 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, closed 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 closed plans with a substantial
inactive liability. Similarly, mature closed 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.
LOW DEFAULT RISK OBLIGATION MEASURE
ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions, was revised
as of December 2021 to include a “low-default-risk obligation measure” (LDROM). This liability measure is
consistent with the determination of the actuarial accrued liability shown on page 8 in terms of member data,
plan provisions, and assumptions/methods, including the use of the Entry Age Normal Cost Method, except
that the interest rate is tied to low-default-risk fixed income securities. The S&P Municipal Bond 20 Year High
Grade Rate Index (daily rate closest to, but not later than, the measurement date) was selected to represent
a current market rate of low risk but longer-term investments that could be included in a low-risk asset
portfolio. The interest rate used in this valuation was 4.81%, resulting in an LDROM of $1,465,478,754 for
Tiers 1 and 2 and $42,964,925 for Tier 3. The LDROM should not be considered the “correct” liability
Arizona Public Safety Personnel Retirement System
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measurement; it simply shows a possible outcome if the Board elected to hold a very low risk asset portfolio.
The Board actually invests the pension plan’s contributions in a diversified portfolio of stocks and bonds and
other investments with the objective of maximizing investment returns at a reasonable level of risk.
Consequently, the difference between the plan’s Actuarial Accrued Liability disclosed earlier in this section
and the LDROM can be thought of as representing the expected taxpayer savings from investing in the plan’s
diversified portfolio compared to investing only in high quality bonds.
The actuarial valuation reports the funded status and develops contributions based on the expected return of
the plan’s investment portfolio. If instead, the plan switched to investing exclusively in high quality bonds, the
LDROM illustrates that reported funded status would be lower (which also implies that the Actuarially
Determined Contributions would be higher), perhaps significantly. Unnecessarily high contribution
requirements in the near term may not be affordable and could imperil plan sustainability and benefit security.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
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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.
6/30/2025
6/30/2024
6/30/2023
6/30/2022
6/30/2021
SUPPORT RATIO
Total Actives
360
402
432
478
527
Total Inactives
1,010
977
958
915
868
Actives / Inactives
35.6%
41.1%
45.1%
52.2%
60.7%
ASSET VOLATILITY RATIO
Market Value of Assets (MVA)
630,157,863
563,229,004
499,650,923
454,903,279
462,371,999
Total Annual Payroll
45,862,398
54,756,590
50,456,154
51,446,946
51,778,399
MVA / Total Annual Payroll
1,374.0%
1,028.6%
990.3%
884.2%
893.0%
ACCRUED LIABILITY (AL) RATIO
Inactive Accrued Liability
841,132,754
795,088,761
760,598,014
700,214,284
643,811,944
Total Accrued Liability
1,072,058,996
1,063,640,663
999,467,697
940,954,891
882,414,474
Inactive AL / Total AL
78.5%
74.8%
76.1%
74.4%
73.0%
FUNDED RATIO
Actuarial Value of Assets (AVA)
606,139,744
557,427,131
508,861,185
467,287,415
422,708,525
Total Accrued Liability
1,072,058,996
1,063,640,663
999,467,697
940,954,891
882,414,474
AVA / Total Accrued Liability
56.5%
52.4%
50.9%
49.7%
47.9%
NET CASH FLOW RATIO
Net Cash Flow 1
4,522,837
11,773,255
9,348,522
11,729,915
1,079,290
Market Value of Assets (MVA)
630,157,863
563,229,004
499,650,923
454,903,279
462,371,999
Net Cash Flow / MVA
0.7%
2.1%
1.9%
2.6%
0.2%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation as of June 30, 2025 - Mesa Police Dept. (018)
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PLAN MATURITY MEASURES AND OTHER RISK METRICS - TIER 3 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.
2 Tier 3 results are shown for the Risk Sharing group, where applicable.
6/30/2025
6/30/2024
6/30/2023
6/30/2022
6/30/2021
SUPPORT RATIO
Total Actives
387
329
272
227
163
Total Inactives
101
79
67
58
35
Actives / Inactives
383.2%
416.5%
406.0%
391.4%
465.7%
ASSET VOLATILITY RATIO
Market Value of Assets (MVA)
27,812,386
19,415,288
12,297,063
7,286,186
4,515,411
Total Annual Payroll
38,128,278
32,907,554
24,115,196
18,126,321
11,717,005
MVA / Total Annual Payroll
72.9%
59.0%
51.0%
40.2%
38.5%
ACCRUED LIABILITY (AL) RATIO
Inactive Accrued Liability
1,613,650
644,924
453,628
308,510
152,944
Total Accrued Liability
24,893,694
16,929,773
10,859,798
6,585,841
3,619,617
Inactive AL / Total AL
6.5%
3.8%
4.2%
4.7%
4.2%
FUNDED RATIO
Actuarial Value of Assets (AVA)
26,469,650
18,840,617
12,272,654
7,422,385
3,983,135
Total Accrued Liability
24,893,694
16,929,773
10,859,798
6,585,841
3,619,617
AVA / Total Accrued Liability
106.3%
111.3%
113.0%
112.7%
110.0%
NET CASH FLOW RATIO
Net Cash Flow 1
5,627,921
5,316,783
4,134,672
3,060,629
1,985,443
Market Value of Assets (MVA)
27,812,386
19,415,288
12,297,063
7,286,186
4,515,411
Net Cash Flow / MVA
20.2%
27.4%
33.6%
42.0%
44.0%