League of Arizona Cities in addition to towns: PSPRS Pension Task Force Phase 1 Phase 2

League of Arizona Cities in addition to towns: PSPRS Pension Task Force Phase 1 Phase 2 www.phwiki.com

League of Arizona Cities in addition to towns: PSPRS Pension Task Force Phase 1 Phase 2

Thomas, Geoff, Executive Producer;Assistant News Director has reference to this Academic Journal, PHwiki organized this Journal Statewide MeetingsFebruary 201502.02.15 versionLeague of Arizona Cities in addition to towns: PSPRS Pension Task ForceFormed in June, 2014Partnership with ACMA in addition to GFOAz15 MembersReview all aspects of PSPRS, identify areas of improvement, in addition to re as long as m recommendationsTask as long as ce2Scott Barber, HR Director, Town of Florence Greg Caton, Town Manager, Town of Oro ValleyKaren Daines, Assistant City Manager, City of SedonaBarbara Fleming, HR Director, City of Sierra VistaBarbara Goodrich, Management Services Director, City of Flagstaff Kelly Gottschalk, Chief Financial Officer/ACM, City of Tucson Alan Maguire, President in addition to Principal Economist, The Maguire CompanyScott McCarty, Town of Queen Creek (Chairman)James Menlove, Finance Director, Navajo County Rick Naimark, Deputy City Manager, City of PhoenixRobert Nilles, Finance Director, City of El Mirage Kathy Reyes, Benefits Administrator, City of AvondaleMarc Skocypec, Assistant Town Manager, Town of GilbertMike Townsend, Assistant County Manager, Coconino County (Vice-Chairman)Marge Zylla, Government Relations, City of Tempe 15 Task as long as ce members3

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Presentations in addition to Materials located at:www.azleague.orgCLICK: ‘Legislative Issues’ BoxCLICK: ‘Pension Task Force’ LineTask as long as ce4256 Employer (Individual) Plans~32,000 Actives / RetireesSame Benefits as long as All PlansFinancial Condition Varies by Plan$6.6B Total UnderfundedER Contribution Rate Varies By PlanEE Contribution Rates are Fixed by AZ Law at 11.65% (as of 7/1/15)PSPRS Overview5Phase 1In as long as mation in addition to Education Phase 2Employer Recommended PracticesPhase 3Yardstick: Characteristics of a Well-Designed Plan Task as long as ce approach 6

Phase 1714 Presentations Stakeholder CollaborationEmployers AZ PSPRS Board in addition to AdministrationArizona Firefighters’ AssociationArizona Fraternal Order of PoliceArizona Police Association6 Major Observationsphase 1 In as long as mation in addition to education8Causes of Deteriorating Financial Condition Great Recession Investment IncomeBenefit Plan DesignAnnual Retiree Pension Benefit Increase (PBI)Actuary AssumptionsFuture PBIs EXCLUDED from Contribution CalculationBenefit IncreasesDROPMajor observations9

Success Is A Combined ResponsibilityMajor observations (continued)10PSPRS Employers are Managing or Not Managing a Pension PlanPSPRS in Not ASRSAssumptions Used vs. Local RealityFiduciary Responsibility ExistsLegislative Body in addition to Local BoardMajor observations (continued)11“Know Your Numbers” Normal Cost vs. Unfunded LiabilityFocus on Dollar Amounts, Not RatesDon’t be Fooled by Low Contributions Today, They Will IncreasePlan Maturity / DemographicsRetiree Annual PBIMajor observations (continued)12

Improve Employer EngagementTask ForceClearing House as long as Concerns in addition to ThoughtsPresentations to Councils, OrganizationsMajor observations (continued)13Plan Changes that Effect Existing Members or Retirees are Not Possible (Legally Challengeable)Fields’ Case (Decided-$375 million impact)Restored PBI Formula as long as Retirees as of 6/1/11Hall Case (Pending)Restore PBI as long as mula Active MembersReduce EE Contributions Back to 7.65%Major observations (concluded)14Phase 215

Employers Can Improve Their Plan’s Financial Condition Today Without Waiting as long as Resolution of Pending Litigation or Legislative ChangesSee Separate Section of Presentation as long as Detailed Discussion Phase 2 Employer Recommended practices 16Phase 317Phase 3 design a well-structured plan (a yardstick)18

What should the Employee, Retiree, Employer, in addition to Taxpayer get out of the SystemHow is this AccomplishedType of Plan, Cost Sharing, Annual Pension Increase (PBI), etc.Key questions19Adequate in addition to Af as long as dableFinancially SolventTransparent in addition to AccountableGUIDING principles20Pension AmountRetirement AgeCOLA / PBICost / Risk SharingFunded StatusDROPPooled Assets in addition to LiabilitiesInvestment StrategiesDedicated RevenuesGovernanceLoan ProgramLegalSmoothing (Deferring)Funding PolicyHealthcare21key plan design elements

Recommendation to League’s Executive CommitteeTool to Evaluate Re as long as m Proposals The Yardstick 22 Employer Recommended Practices23What is the Financial Condition of My PlanHow Can I Improve the Financial Condition of My Plan NowIncrease AssetsDecrease LiabilitiesDesigned to answer two Key Questions24

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Unfunded LiabilityFunded Status (Funded Ratio)Pension Funding FormulaActuary 10125Unfunded liability (debt) 26Liabilities- Assets= Unfunded Liability (Debt)PSPRS Liabilities are Not Pooled (256 plans)Unfunded Liabilities have been Earned in addition to Cannot be Diminished or ImpairedPension Clause in addition to Field’s DecisionThe Amount in addition to Timing of Your Contribution Directly Impacts the Funded Status of Your PlanA More Appropriate Term as long as Unfunded Liabilities is Debt27Unfunded liability (debt)

Identifies the Assets Available to Fund the Liabilities (in Today’s Dollars)Goal: 100% Funded or Greater Funded status (funded ratio) 28AssetsLiabilitiesParadise Valley’s unfunded liability at 6/30/1429C + I = B + EContributions Interest Benefits ExpensesPension funding equation30

Education in addition to CollaborationEmployer EngagementEmployer Recommended PracticesYardstickLegislative Solutions Will Take TimeTask as long as ce summary55WE NEED YOUFinal Thought56 Questions in addition to Comments57

Thomas, Geoff Executive Producer;Assistant News Director

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