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City Of Flagstaff Working Toward Full Funding Of Public Safety Pension System

The city of Flagstaff is working toward fully funding the city’s Public Safety Personnel Retirement System’s unfunded liability. Since 2003, the unfunded liability has grown to $112-million dollars, with is owed by the city. The pension is for retired police and fire personnel. Currently the city pays around $850-thousand dollars annually toward the liability out of the Use Tax revenue. The excess contributions in this year’s budget are estimated at two-million dollars. Pension Bond Underwriters were brought in to discuss how the city can pay off the liability. They developed a 100-percent funded plan by issuing Certificates of Participation debt at a lower interest rate than what is being incurred currently. It will enable the city to reduce its annual contributions, level off future contributions and pay off the debt in 20 years instead of 28. It will also set up a reserve fund to mitigate the risk of changing markets and will provide nearly $55-million dollars in net present value savings. This will also be done without raising sales tax or property taxes. The plan is part of the budget that still needs to be passed by the city council.