Arizona’s troubled Public Safety Personnel Retirement System has a new Administrator. Michael Townsend has been appointed by the PSPRS Board of Trustees.

The system provides retirement benefits to the state’s first responders, corrections officers, judges and elected officials. It currently has many departments whose pension plans are underfunded. These include the La Paz County Sheriff’s Office, the Buckskin Fire Department, and the Arizona Department of Public Safety.

These departments, and others around the state, have low funding ratios, meaning the money they have to take care of present and future demands on the system. The La Paz SO has a ratio of 35.31 percent and makes the equivalent of 75.3 percent of their employees’ salaries in pension plan contributions each year. The Buckskin Fire Department has a ratio of 39.3 percent and make pension contributions that amount to 48.66 percent of their employees’ salaries. The DPS has a ratio of 33.3 percent and pays the equivalent of 97.5 percent of their employees’ salaries in pension contributions.

The PSPRS says a funding ratio of 75 percent is a healthy one.

In 2017, a report from the Pew Charitable Trust said the PSPRS had less than half of what they would need to meet present and future obligations.

Townsend is a certified public accountant, and he has served as Deputy Coconino County since 2007. During that time, he led policy initiatives that raised the county’s funding ration to PSPRS from 25 percent to 70 percent.

PSPRS Board Chairman Will Buividas said Townsend has the experience they are looking for to improve all aspects of the funds’ operations and to bring the pension fund back to financial health.

“The PSPRS Board of Trustees is very focused on helping local governments understand and ultimately reduce their unfunded pension liabilities,” Townsend said in a comment for the Pioneer.  “I’m looking forward to contributing to the board’s goal of lowering the long term costs for employers.  This goal is in the best interest of our members and the taxpayers.”

Bret Parke had been serving as Interim Administration since April 2019. In a press release, it was stated he implemented policies that will contribute to the long-term health of the system.

There have also been changes made through the state legislature, either by legislative action or the legislature placing changes on the ballot.

PSPRS Spokesman Christian Palmer said many of the changes are intended to have long-term effects, and how effective they are won’t be known for some years.

Around the state, communities have been looking at various ways of increasing their pension funding ratios. La Paz County has made a proposal to the County Supervisors’ Association that counties be allowed to use special excise taxes to pay for their pension contributions. District 2 Supervisor D.L. Wilson said taxpayers are already paying for these contributions through the general fund, and an excise tax means visitors and tourists will also be paying for them.

The City of Prescott has already enacted a special excise tax for their pension contributions. In 2017, Prescott voters approved Prop. 443, a three-quarter cent sales tax dedicated solely to the purpose of paying down their unfunded liability to the PSPRS.

In an article at the Signals Arizona website, Mayor Pro Tem Billie Orr and Councilman Steve Sischka said that, before Prop. 443, the city’s general fund was very unstable due to the Annual Required Contribution to the PSPRS. Prescott was looking at unfunded liabilities of $80 million in the public safety retirement fund. There were some calling for Prescott to declare bankruptcy.

In the two years since Prop. 443 was passed, Orr and Sischka said they have raised the funding ratio from 33 percent to 46 percent. They do not use any of the Prop. 443 money to pay for their Annual Retired Contribution, which is now $7.2 million a year. They said that, without Prop. 443, that payment would be closer to $10 million.

The tax is scheduled to end after 10 years or when the unfunded liabilities come down to $1.5 million. They said they are on track to retire the tax in December 2025, two years ahead of schedule.

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