During the monthly RWOP forum held at Las Fuentes, Councilwoman Billie Orr, Councilman Steve Sischka and Prescott City Manager Michael Lamar discussed the issues surrounding PSPRS.
Last Friday, on February 17, the topic of the Las Fuentes forum was the unfunded liability of the Public Safety Personnel Retirement System as it affects the City of Prescott. But it wasn’t just about the problem, it was largely focused on the proposed solutions developed by the Strategic Planning Committee.
How big is the problem?
If there were not an unfunded liability to pay, the City of Prescott’s normal pension cost would be about 82% less than what they have to pay. Here are the numbers:
FY17 PSPRS normal pension cost: $976,388
FY17 PSPRS normal pension cost plus the payment to the unfunded liability: $6,343,784
FY18 PSPRS estimated normal pension cost: $1,291,939
FY18 PSPRS estimated normal pension cost plus the payment to the unfunded liability: $7,595,312
That’s a $1,251,528 increase in one year.
How to solve the problem?
Acknowledging that the pension cost will never go away, the council is proposing paying it down to the point where the payments can be comfortably managed by monies in the general fund. The Strategic Planning committee estimates that it will take about 10 years to accomplish that goal. The current ideas being considered by Council include:
1. Using reserve funds (carefully) to pay down the principle of the unfunded liability.
2. Selling unneeded properties owned by the City, and using the funds to pay down the principle of the unfunded liability. (This isn’t as straightforward as it may seem. See: Councilwoman Orr on PSPRS: ‘This is a Solvable Problem’)
3. Adding a .75¢ sales tax for 10 years.
4. Seeking legislative help at the state level.
These solutions are not exclusive of one another, it is expected that all the ideas will be used as part of a package to reduce the payments to the point where they are manageable.
Battling a glitchy projector, Councilmembers Orr and Sischka; and City Manager Michael Lamar explained the issues and options before taking questions at the end. (The slides are provided below.)
A simple question
At the end, Lamar asked a simple question. “For people who have talked a lot about waiting, here’s a question for those folks that feel we need to wait… What are we waiting on? And how long do we wait? I can’t get my arms around - if you have a constitutionally-protected pension, even a legislative solution is not guaranteed to get over the judicial muster, it hasn’t in the past. There have been legislative solutions that have been kicked out of court... So, if that’s a possibility, are we rolling the dice with our own future?”
Lamar continued, "Hope - someone said the other day that hope isn’t a strategy, and they’re right. But, hoping that a legislative solution is going to be created that passed judicial muster, that sounds like hope to me. How long do we hold on? How long do you want us to wait? Nobody’s really answered that for me. So, I guess I’m asking, just generally, going forward, people that are in opposition to this as an answer, I’d like to understand their perspective so I can appreciate it and process it.”
On the 3rd Friday of each month at 3 PM, the Republican Women of Prescott meet at Las Fuentes to bring information and discussion of local issues to the residents of Las Fuentes. The public is also invited.