In June 2015 Oro Valley’s Arizona Public Safety Personnel Retirement System (PSPRS) actuarial unfunded liability was $12.9 million.
By the time of the latest annual report in June 2019 the liability has grown to $23.6 million. Our unfunded liability has almost doubled in just four years. This despite an overall strong economy during the same period. This despite the fact that our Town has made every payment to the State in-full.
What is happening? The State mandated minimum payment simply does not guarantee that Oro Valley manage our unfunded liability the way that our Police Department deserves. The State mandated payment allows municipalities whose finances are simply not as strong as ours to avoid the unaffordable, yearly cost of maintaining their unfunded liability at a fixed target level.
Why should a town like Oro Valley find itself in this position?
Minimizing our PSPRS unfunded liability needs to be viewed as an investment opportunity.
Based upon the results since 2015, it is clear to me that funding our PSPRS beyond the minimum would have greatly rewarded our Town over the long term. No other investment available to us would have achieved the same rate of return. Oro Valley proudly maintains reserves well in excess of the level required by the State of Arizona. Our Town also spends over $2M annually on the Community Center. Both the excess reserves and funding of the Community Center come at a very high cost with respect to our PSPRS unfunded liability.
The Oro Valley Town Council needs to have the courage to increase our annual contributions. This is a stance that will not be popular with many interests. Every dollar of current revenue is already accounted for. Prior Councils who were in office while this unfunded liability exploded will defend their course of action.
With respect to our PSPRS, the Oro Valley Town Council needs to “walk the talk” with respect to Public Safety. We have an opportunity to reverse a negative trend of rapidly increasing unfunded liability. We also have the opportunity to make an investment that will provide a very high rate of return. But we need to overcome the inertia of our current path.
I seek your vote so I can become part of a Council that will invest in the long-term well-being of our Police Department for the long-term well-being of our Town.