Public Safety Pension Financing
All municipalities in Arizona are responsible for funding the pension of their public safety personnel. Glendale's public safety pension programs are managed by the Public Safety Pension Retirement System (PSPRS), which is a statewide program. The City of Glendale currently contributes over $30 million per year from its General Fund to public safety pensions. Unfortunately, due to past shortfalls and the Great Recession of the late 2000s, Glendale's public safety pension system is severely underfunded.
The Glendale Police pension is funded at only 49.4% and the Glendale Fire pension is funded at only 58.8%. In order to take a positive step in responsibly tackling these costs, the city is pursuing an innovative and proven program that is currently in use by other municipalities. The program utilizes a Certificates of Participation (COP) financing method to help fund and stabilize our public safety pensions. By implementing a COP program, the city can take advantage of historically low interest rates and maximize savings to the taxpayers. To qualify for the financing, the city will leverage a portfolio of existing real property assets that it owns. The savings for a single month are as much as $1,000,000 in the first year. The total anticipated savings is $138 million over a 17 year span. This is an average of $8 million per year or $680,000 per month.
The primary objectives of the COP is for the City of Glendale to achieve 90% funding of its public safety pension plan, reduce the city’s annual debt payments, savings to Glendale taxpayers, and to set up a reserve fund to minimize the risk of changing market and actuarial assumptions.
Many Arizona jurisdictions have already taken advantage of current favorable interest rates and many others are considering this type of innovative opportunity to address unfunded liabilities in their public safety pensions.
Our Police Officers and Firefighters serve our community 24 hours every day of the year, often putting themselves in harm’s way. They deserve our appreciation, gratitude and the certainty that their pensions are being managed in a fiscally responsible manner.