Meeting Location

:
Agenda City Council Chambers
200 W. Jefferson St.
City Council Policy Session Phoenix, Arizona 85003

Tuesday, June 13, 2017 2:30 PM phoenix.gov

CALL TO ORDER

COUNCIL INFORMATION AND FOLLOW-UP REQUESTS

This item is scheduled to give City Council members an opportunity to publicly
request information or follow up on issues of interest to the community. If the
information is available, staff will immediately provide it to the City Council
member. No decisions will be made or action taken.

CONSENT AGENDA

This item is scheduled to allow the City Council to act on the Mayor’s
recommendations on the Consent Agenda.

CALL FOR AN EXECUTIVE SESSION

A vote may be held to call an Executive Session.

REPORTS AND BUDGET UPDATES BY THE CITY MANAGER

This item is scheduled to allow the City Manager to provide brief informational
reports on topics of interest to the City Council. The City Council may discuss
these reports but no action will be taken.

ORDINANCES, RESOLUTIONS AND FORMAL ACTIONS

ROLL CALL & CITY CLERK READS 24-HOUR PARAGRAPH

1 Colorado River Drought Contingency Plan - Multi-Party Page 3
Agreement to Fund the Gila River Indian Community's
Proposal for Colorado River System Conservation (Ordinance S-43641)
Request authorization for the City Manager, or his designee, to execute
the Agreement among the United States of America, through the
Department of the Interior, Bureau of Reclamation, the State of Arizona,
through the Arizona Department of Water Resources, the Gila River Indian
Community, the City of Phoenix and the Walton Family Foundation, to

Page 1
City Council Policy Session Agenda June 13, 2017

Fund the Creation of Colorado River System Water through Voluntary
Water Conservation and Reductions in Use During 2017 ("Agreement").
Further request authorization for the City Controller to disburse all funds
related to this item.
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the
Water Services Department.

ITEMS FOR INFORMATION AND DISCUSSION

2 Public Safety Pension Payment Options Page 7
This report provides information for Council discussion on several options
for the City to consider regarding the funding of its Public Safety
Personnel Retirement System (PSPRS) obligations.

THIS ITEM IS FOR INFORMATION AND DISCUSSION.
Responsible Department
This item is submitted by City Manager Ed Zuercher, Chief Financial
Officer Denise Olson and Budget and Research Director Jeff Barton.

ADJOURN
For further information or for reasonable accommodations, please call the Management Intern,
City Manager's Office, at 602-262-4449 or Relay 7-1-1 as early as possible to coordinate needed
arrangements.

Si necesita traducción en español, por favor llame a la oficina del gerente de la Ciudad de
Phoenix, 602-262-4449 tres días antes de la fecha de la junta.

Members:
Mayor Greg Stanton
Vice Mayor Laura Pastor
Councilwoman Thelda Williams
Councilman Jim Waring
Councilwoman Debra Stark
Councilman Daniel Valenzuela
Councilman Sal DiCiccio
Councilman Michael Nowakowski
Councilwoman Kate Gallego

Page 2
City Council Policy Session

City Council Report

Agenda Date: 6/13/2017, Item No. 1

Colorado River Drought Contingency Plan - Multi-Party Agreement to Fund the
Gila River Indian Community's Proposal for Colorado River System Conservation
(Ordinance S-43641)

Request authorization for the City Manager, or his designee, to execute the Agreement
among the United States of America, through the Department of the Interior, Bureau of
Reclamation, the State of Arizona, through the Arizona Department of Water
Resources, the Gila River Indian Community, the City of Phoenix and the Walton
Family Foundation, to Fund the Creation of Colorado River System Water through
Voluntary Water Conservation and Reductions in Use During 2017 ("Agreement").
Further request authorization for the City Controller to disburse all funds related to this
item.

Summary
Under the proposed Agreement, the Gila River Indian Community ("Community") will
contribute 40,000 acre-feet of its Colorado River allocation to system conservation in
Lake Mead in 2017. The State of Arizona, the City of Phoenix, and the Bureau of
Reclamation will each contribute $2 million towards this program, and the Walton
Family Foundation will contribute $1 million, to compensate the Community for its
contribution of water.

System conservation occurs when conserved water is left voluntarily and permanently
in the Colorado River above Hoover Dam to stabilize water levels in Lake Mead and
forestall shortages. Because the Colorado River is over-allocated and stakeholders of
the basin must collectively find a way to use less water, it is in Phoenix's long-term
strategic interests to help develop, implement and fund system conservation programs.
More information on the Lower Colorado River Basin Drought Contingency Plan (DCP)
is provided in Attachment A.

While not included in this Agreement, it is anticipated that the State, the City, the
Bureau of Reclamation, and the Walton Family Foundation will consider similar
contributions into the future to fund regional system conservation efforts that will be
open to additional participants in the form of water contributors and funders. Future
funding for system conservation by the City will require additional Council action to
approve specific funding agreements.

Page 3
Agenda Date: 6/13/2017, Item No. 1

Contract Term
The contract term will begin on or about July 1, 2017. The contract will terminate upon
final payment by the Bureau of Reclamation to the Gila River Indian Community for
system conservation created in 2017.

Financial Impact
The cost to the City of Phoenix to fund system conservation in 2017 under this
Agreement is $2 million. Funds are available in the Water Services Department's
Capital Improvement Program budget as part of the Water Services Department's
Colorado River Resiliency Fund.

Concurrence/Previous Council Action
The Phoenix City Council approved creation of the City's Colorado River Resiliency
Fund in 2014, for the purpose of funding projects focused on water supply resiliency,
including system conservation efforts.

Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services
Department.

Page 4
Attachment A

Colorado River System Conservation
This report provides the City Council with an update on the Lower Colorado River Basin
Drought Contingency Plan agreement (DCP) and regional agreements for system
conservation activities.

Summary
The Colorado River is over-allocated and as a result the Lower Basin states of Arizona,
California, and Nevada, as well as the Republic of Mexico take more water out of Lake
Mead than is returned to the system, creating a structural deficit. This structural deficit
causes water levels in Lake Mead to decline over time. Water levels in Lake Mead are
currently at historic lows. Without action, water levels in Lake Mead will likely continue
to decline overtime and the Secretary of the Interior (Secretary), the watermaster of the
Colorado River, will declare a shortage. Because the river is over- allocated,
stakeholders must find a way to collectively use less water in the form of system
conservation efforts across the basin. System conservation occurs when conserved
water is left voluntarily and permanently in the Colorado River to stabilize water levels in
Lakes Powell and Mead and forestall shortages.

Shortages on the Colorado River are declared and managed through a Record of
Decision issued by the Secretary in 2007, commonly referred to as the Interim
Guidelines. Per the Interim Guidelines, shortage is declared when Lake Mead content is
projected to be at or below an elevation of 1,075 feet. Increasingly, larger shortages are
declared when Lake Mead is projected to be below elevations of 1,050 feet and 1,025
feet. There are no set guidelines for circumstances in which the elevation of Lake Mead
continues to fall below 1,025 feet. The lowest water outlet at Hoover Dam is at 895 feet
in elevation. Below this level, water cannot be released and the system reaches a "dead
pool" state.

Under the terms of the 1968 Colorado River Basin Project Act, through which the
Central Arizona Project canal was authorized for construction to bring Colorado River
water into Central Arizona, nearly all of the Colorado River water that is brought into
Central Arizona is subject to curtailment under shortage conditions at Lake Mead before
any curtailment occurs for water users along the mainstream in Arizona or for Colorado
River water users in California. Central Arizona's Colorado River water use is junior in
priority compared to these other users.

Page 5
Under the current Interim Guidelines, under shortage conditions Arizona's 2.8 million
acre-foot Colorado River allocation is cut by 320,000 acre-feet, 400,000 acre-feet, and
480,000 acre-feet at Lake Mead elevations of 1,075 feet, 1,050 feet, and 1,025 feet,
respectively. Nearly all of these cuts fall on water users in Maricopa, Pinal, and Pima
counties.

Phoenix continues to plan methodically for shortage conditions on the Colorado River to
ensure that it is well situated to contend with shortages that occur when Lake Mead
elevations fall below 1,075 feet, 1,050 feet, and 1,025 feet. However, below Lake Mead
elevations of 1,025 feet exist great uncertainty and potentially catastrophic outcomes for
the region such as dead pool. Phoenix's interest is in working with others in the region
to create a more resilient Colorado River for the long run through system conservation,
so that the risk of catastrophic shortages is minimized.

The Lower Basin states of Arizona, California, and Nevada, and the Republic of Mexico
are engaged in discussions about how to prevent shortages that could cause great
economic disruption. The result of these discussions is the framework of an interstate
agreement referred to as the Drought Contingency Plan (DCP), which would be in place
through the year 2026, when the Interim Guidelines expire. There is progress towards
an agreement that would entail Arizona, Nevada, and California voluntarily foregoing
water under certain conditions to help boost Lake Mead elevation levels. In addition, the
DCP would include expanded use of system conservation and temporary storage
mechanisms that incentivize water users to store conserved water in Lake Mead to
forestall shortages.

For the DCP agreement between Arizona, California, Nevada, and the Republic of
Mexico to come to fruition, Colorado River stakeholders in Arizona must first come to
agreement regarding impacts of the DCP to water users in Arizona. These negotiations
are ongoing. The City of Phoenix Water Services Department, the State of Arizona, the
Gila River Indian Community, the U.S. Bureau of Reclamation, and the Walton Family
Foundation are interested in entering into an agreement that, it is hoped, will move
stakeholders closer to an ultimate agreement for implementation of the DCP in Arizona,
commonly referred to as DCP Plus.

Because the Colorado River is over-allocated and stakeholders of the basin must
collectively find a way use less water, it is in Phoenix's long-term strategic interests to
help develop, implement, and fund system conservation programs. The Phoenix City
Council approved creation of the City's Colorado River Resiliency Fund in 2014, for the
purpose of funding projects focused on water supply resiliency, including system
conservation efforts.

Responsible Department
This report is submitted by Deputy City Manager Karen Peters and the Water Services
Department.

Page 6
City Council Policy Session

City Council Report

Agenda Date: 6/13/2017, Item No. 2

Public Safety Pension Payment Options

This report provides information for Council discussion on several options for the City
to consider regarding the funding of its Public Safety Personnel Retirement System
(PSPRS) obligations.

THIS ITEM IS FOR INFORMATION AND DISCUSSION.

Summary
In April 2017, the Governor signed legislation (HB2485/SB1442) authorizing the City
Council to make a one-time request to change the amortization period of our police
and fire pension plans to a period not to exceed 30 years. The current period is 20
years.

The City of Phoenix police and fire PSPRS pension funds have a combined $2.1 billion
in unfunded actuarial liability based on current PSPRS assumptions. This unfunded
liability has placed significant stress on the City's budget, particularly the General
Fund. A change in the amortization period from 20 to 30 years would relieve some of
that stress by lowering the annual payments. However, the longer payoff period would
mean that the City would pay more over time than if the 20-year period were kept.

The City has several options (Attachment A), which will be discussed in more detail
below:
1. Status Quo - maintain the current amortization schedule of 20 years.
2. 30/2018 - move the amortization schedule to 30 years, effective July 1, 2018.
3. 30/2017 - move the amortization schedule to 30 years, effective July 1, 2017 and
use the 2017-18 savings to start a pension reserve fund.
4. Hybrid - move the amortization schedule to 30 years, effective July 1, 2017, and
set up a pension reserve fund with the savings, and any other extra funds
designated by the Council, and make payments on a 20- or 25-year schedule or
offset unexpected spikes in General Fund pension costs.

In order to make the one-time, irrevocable selection, the City Council must pass a
resolution and send it to the PSPRS Board. On May 18, the PSPRS administrator
informed members that it is possible to make this selection for the period beginning

Page 7
Agenda Date: 6/13/2017, Item No. 2

July 1, 2017, provided the request is sent to the board by June 21, 2017(Attachment
B). If the selection is to begin in July 2018, the selection should be done by the end of
2017.

Option A: Status Quo

Description: PSPRS has put the unfunded liability for public safety pensions on a 20-
year amortization schedule to pay it down to $0. The current unfunded liability being
paid down is $2.1 billion combined between Police and Fire. City Charter and State
law require the City to pay 100% of the Actuarially Required Contributions (ARC).

Date: No action needed.

Additional Cost: Baseline scenario; no additional cost above PSPRS current estimate
(it is important to note that economic, market and actuarial assumptions and conditions
can change the actual numbers in any given year).

Issues:
1. Pays off liability quicker. 20 years is the most conservative approach to
paying off accumulated unfunded liability (accumulated since early 2000s).
2. Reduces our budget flexibility. 20-year amortization payments are putting
pressure on our existing resources. We already know we need to cut in 2018 to
continue paying pension costs and employee compensation restoration. The
2018-19 budget shows a deficit between $43 - $64 million, which will require
cutting services, administrative costs and/or raising revenue. (Employee
compensation costs are set by contract through 2019-20). Without pension
relief, the cuts or revenue required are more significant.
3. Lose opportunity for $30-35 million in savings. Not choosing a 30-year
amortization means an estimated $30 - $35 million in savings for 2017-18 are
lost, so a pension reserve fund is not available.
4. Concerns from credit rating agency. The May 23, 2017 Moody’s report stated
one of Phoenix’s credit challenges was the “Elevated fixed cost burden
pressured by growing pension contributions.” Moody’s further states that one
factor that could lead to a downgrade is “Greater than anticipated growth in fixed
cost over the forecast horizon particularly for pension contributions”.

Option B: 30-Year Amortization beginning in 2018

Description: The State Legislature has provided an option for the City Council to
select a longer amortization period (up to 30 years) to pay off the unfunded liability. A
longer payoff period means lower yearly payments, but results in up to $2.3 billion

Page 8
Agenda Date: 6/13/2017, Item No. 2

more in payments over a longer period of time (Attachments C and D).

Date: Action needed by the end of 2017 for a July 1, 2018 start date.

Cost: Estimated additional $2.3 billion in payments over the additional 10 years of
amortization (it is important to note that economic, market and actuarial assumptions
and conditions can change the actual numbers in any given year).

Issues:
1. Costs more over time. A 30-year schedule stretches debt payments out over
10 more years, increasing total payments by an estimated $2.3 billion.
2. Increases budget flexibility in 2018-19. 30-year amortization payments are
lower, freeing up money to preserve services or pay for other immediate needs.
In case of an economic downturn, the lower payments put less stress on the
budget than payments for a 20-year schedule. B&R estimates $15 - 25 million in
ongoing budget savings for 2018-19 (reducing the budget gap estimate to $18 -
49 million). This assumes that the 2014 actuarial tables are phased in and that
the assumed rate of return continues to be lowered by the PSPRS board, both of
which lower the amount of savings from the choice of 30 years.
3. Lose opportunity for $30-35 million in savings. Waiting until 2018 means
estimated $30 - $35 million in savings for 2017-18 are lost, so a pension reserve
fund is not available.
4. Concerns from credit rating agency. Standard and Poors has stated that a
choice to increase costs over the long term in exchange for budget flexibility
could be viewed negatively as a technique to mask an underlying deficit between
revenue and expenses.

Option C: 30-Year Amortization beginning in 2017

Description: The State Legislature has provided an option for the City Council to
select a longer amortization period (up to 30 years) to pay off the unfunded liability. A
longer payoff period means lower yearly payments, but over a longer period of time.
The Council can ask PSPRS to change the amortization period as soon as July 1,
2017, if the decision is made by June 21 and transmitted to the PSPRS board for their
June 28 meeting.

Date: Action needed by June 21.

Cost: Estimated additional $2.3 billion in payments over the additional 10 years of
amortization (it is important to note that economic, market and actuarial assumptions
and conditions can change the actual numbers in any given year).

Page 9
Agenda Date: 6/13/2017, Item No. 2

Issues:
1. Costs more over time. A 30-year schedule stretches debt payments out over
10 more years, increasing costs by an estimated $2.3 billion.
2. Increases budget flexibility immediately. 30-year amortization payments are
lower, freeing up money to preserve services or pay for other immediate needs.
In case of an economic downturn, the lower payments put less stress on the
budget than payments for a 20-year schedule. B&R estimates savings of $30 -
$35 million in 2017-18 and $15 - 25 million in ongoing budget savings for 2018-
19 (reducing the budget gap estimate to $18 - 49 million). This assumes that the
2014 actuarial tables are phased in and that the assumed rate of return
continues to be lowered by the PSPRS board, both of which lower the amount of
savings from the choice of 30 years.
3. Creates a $30-$35 million pension reserve fund. This option provides an
estimated $30 - $35 million in one-time savings in 2017-18 for a pension reserve
fund to use to pay future ARC payments.
4. Concerns from credit rating agency. Standard and Poors has stated that a
choice to increase costs over the long term in exchange for budget flexibility
could be viewed negatively as a technique to mask an underlying deficit between
revenue and expenses.

Option D: Hybrid selection of 30-year cost with a 20- or 25-year payment plan

Description: The Council could take an action for PSPRS to put our pension plans on
a 30-year amortization schedule which sets the minimum payment. The City Council
can always elect to pay more each year. The City could choose to pay the additional
amount for a 20- or 25-year option provided by PSPRS and affirmed by City actuaries.
This would provide the flexibility of the lower 30-year payment in years when there are
budget deficits, but allow a more aggressive payoff schedule to save added cost (this
is similar to making extra payments on a 30-year home mortgage for an earlier payoff
and lower cost).

Date: Action needed by June 21.

Cost: Estimated additional cost of $0 to $2.3 billion over the additional 10 years of
amortization depending on the 20- to 30-year payment schedule provided by PSPRS
and chosen by the City (it is important to note that economic, market and actuarial
assumptions and conditions can change the actual numbers in any given year).

Page 10
Agenda Date: 6/13/2017, Item No. 2

Issues:
1. Council has flexibility to determine how much more this option costs.
Selecting a payment schedule between 20- and 30-years would allow the
Council to determine how much more it would cost, between $0 and $2.3 billion.
2. Increases budget flexibility immediately in 2017-18. 30-year amortization
payments are lower, freeing up money to preserve services or pay for other
immediate needs. In case of an economic downturn, the lower payments put
less stress on the budget than payments for a 20-year schedule. B&R estimates
savings of $30 - $35 million in 2017-18 and $15 - 25 million in ongoing budget
savings for 2018-19 (reducing the budget gap estimate to $18 - 49 million). This
assumes that the 2014 actuarial tables are phased in and that the assumed rate
of return continues to be lowered by the PSPRS board, both of which lower the
amount of savings from the choice of 30 years.
3. Seeds a $30-$35 million pension reserve fund. This option provides an
estimated $30 - $35 million in one-time savings in 2017-18 for a pension reserve
fund to use to pay future ARC payments and absorb unexpected rate increases.
It would be important to adopt the fund in an ordinance to clearly identify its
purpose of providing resources to pay the pension obligation off in advance.
4. Concerns from credit rating agencies. It is not clear what the ratings agencies
would think of this option. On the positive side, the option provides budget
flexibility and increases our reserves. However, depending on the payments
made it increases costs over the longer term. To be viewed more positively, the
City would set the amortization period (20, 25 or 30 years) in conjunction with
approving a balanced budget for FY 2018-19 and make a formal commitment to
only change the payment schedule if there is a downturn in the economy or
unexpected cost spikes.

Based on staff analysis, the City Manager, Chief Financial Officer and Budget and
Research Director recommend Option D: Hybrid as providing the City with the greatest
budget flexibility combined with a structured plan to responsibly pay the accumulated
public safety pension obligation. These options will be placed on the Formal Agenda
of June 21.

Responsible Department
This item is submitted by City Manager Ed Zuercher, Chief Financial Officer Denise
Olson and Budget and Research Director Jeff Barton.

Page 11
Attachment A

PSPRS Amortization Options
Issue
Impact on
Amortization Budget Pension
Decision Date Interest Credit Risk
Period Flexibility Reserve Fund
Option Expense*
Yes-higher
fixed costs and
A: Status Quo None Needed 20 yrs. 0 0 0
less budget
flexibility
$2.3 Billion Yes-greater
Fall/Winter over 10 $15-25 Million interest
B: 30/2018 30 yrs. 0
2017 additional Relief expense, longer

Page 12
years term
$2.3 Billion Yes-greater
over 10 $15-25 Million interest
C: 30/2017 June 21, 2017 30 yrs. $30-35 Million
additional Relief expense, longer
years term
$0-2.3 Billion Yes-potential
over 10 $0-25 Million greater pension
D: Hybrid June 21, 2017 20-30 yrs. $30-35 Million
additional Relief liability,
years longer term

* Based on PSPRS information dated December 12, 2016 and June 6, 2017.
Attachment B
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM

MEMO

Date: Thursday, 18 May 2017

To: John Flynn, Executive Director, Arizona Fire District Association
Ken Strobeck, Executive Director, League of Arizona Cities and Towns
Craig Sullivan, Executive Director, County Supervisors Association
Manuel Johnson, Tribal Government Representative, PSPRS Advisory Committee

From: Jared Smout, Administrator, Public Safety Personnel Retirement System

Re: HB2485; Employer ability to increase their individual amortization period

Gentlemen, an unintended, yet possibly beneficial, consequence of the emergency clause attached to
HB2485 and the unanticipated amendment to SB1442 affecting the amortization period of the unfunded
liabilities is that an employer has the ability to choose a longer amortization period now and have it
applied to their June 30, 2016 actuarial valuation, thereby possibly lowering their fiscal 2017-18
employer contribution rate. This is not being recommended by the Board of Trustees, but is an option to
provide short-term relief for those employers who may need it.

Unfortunately, that does not give us much time to act in the event an employer does want to pursue that
option now. As such, I have asked our actuaries to calculate a revised employer contribution rate based
on a 30-year amortization period for each employer. This will facilitate an efficient and speedy process
to help them make a decision, but what we will not be able to do in this short period of time is to provide
any individual analysis on the effects of a longer amortization period, including dollar costs, provide the
rate for a period different than 30 years or make individual presentations to the governing body in their
efforts to decide.

Therefore, I am seeking your help to communicate this message to your respective groups and our
limitations placed upon us right now. I am providing the rates, a standard resolution to be used by their
governing body and a memo from our actuaries outlining the pros and cons of choosing to extend the
amortization period.

In order for their fiscal 2017-18 rate to be revised, the only two opportunities for the Board of Trustees
to hear these requests are at the May 31 and June 28 meetings, where we must receive the written
request with the adopted resolution one week prior to each meeting date.

If an employer is in need of this relief and can afford to wait, it is recommended they do in order to take
a more measured approach to this decision. For the June 30, 2017 valuations to be released in the fall,
we will be able to provide more data to help employers make a more informed decision while they
discuss and digest the information over a longer period of time.

Page 13
Date: May 16, 2017

To: Jared Smout, Arizona Public Safety Personnel Retirement System
From: James D. Anderson, FSA, EA, MAAA, Francois Pieterse, ASA, FCA, MAAA and Mark Buis,
FSA, EA, FCA, MAAA
Re: Pros and Cons of Lengthening the Amortization Period

This memorandum explores the pros and cons of lengthening the amortization period for legacy Public
Safety Personnel Retirement System (PSPRS) and Corrections Officer Retirement Plan (CORP) plans. The
current remaining amortization period is 20 years. HB 2485 allows employers to make a one-time
request of the Retirement Board to lengthen the amortization period to 30 years.

Pros:
 By lengthening the amortization period, the same debt (unfunded liability) is paid off over a
longer period of time, thereby decreasing the initial total contribution requirement.
 Significant spikes in employer contribution rates for pension funds could wreak havoc on
budgets and budget planning. Lengthening the amortization period could restore a modicum of
predictability when budgeting.

Cons:
 Lengthening the amortization period increases the time during which the plan experiences so-
called “negative amortization” – during which employers effectively pay only part of the interest
and no principal on the debt, so the unfunded liability actually grows before decreasing.
 Pension funding becomes costlier over the long run by lengthening the amortization period due
to additional interest that employers must pay on their amortized portions.
 When lengthening the amortization period, deferring recognition of pension costs that have
already occurred inappropriately shifts these costs to future taxpayers (i.e. violating
generational equity). Borrowing through the pension funds is not as transparent to taxpayers
and works to hide rapidly mounting costs from them.
 Lengthening the amortization period may destabilize the pension system to the degree it
undermines the amount of assets available to the fund for future benefits.
 Overfunded plans could have an increase in contribution amounts when the amortization period
is lengthened.

A graphical depiction of the impact of lengthening the amortization period under level percent of payroll
financing follows.

Page 14
Jared Smout
May 16, 2017
Page 2

James D. Anderson, Francois Pieterse and Mark Buis are members of the American Academy of
Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the
actuarial opinions contained herein.

Page 15
PSPRS Employer Contribution Rates (Pension + Health)
Comparison of 20- and 30-year Amortizations of Unfunded (as of June 30, 2016 for July 1, 2017)
20-Year 30-Year
Division Name Funded Rate Rate ∆
COUNTIES
101 APACHE COUNTY SHERIFF'S DEPT. 30.63% 54.08% 45.41% -8.67%
046 COCHISE COUNTY SHERIFF'S DEPT. 39.76% 54.96% 45.92% -9.04%
061 COCONINO COUNTY SHERIFF'S DEPT. 51.37% 62.70% 51.66% -11.04%
112 GILA COUNTY SHERIFF'S DEPT. 39.86% 51.45% 43.09% -8.36%
140 GRAHAM COUNTY SHERIFF'S DEPT. 57.93% 41.36% 35.34% -6.02%
157 GREENLEE COUNTY ATTORNEY INVEST. 567.49% 7.55% 7.45% -0.10%
123 GREENLEE COUNTY SHERIFF'S DEPT. 72.17% 28.26% 25.13% -3.13%
173 LA PAZ COUNTY ATTORNEY INVEST. 55.24% 8.00% 8.00% 0.00%
103 LA PAZ COUNTY SHERIFF'S DEPT. 39.22% 48.76% 40.66% -8.10%
165 MARICOPA COUNTY ATTORNEY INVEST. 54.75% 46.41% 39.88% -6.53%
202 MARICOPA COUNTY PARK RANGERS 84.31% 8.00% 8.00% 0.00%
016 MARICOPA COUNTY SHERIFF'S OFFICE 45.18% 52.79% 44.60% -8.19%
043 MOHAVE COUNTY SHERIFF'S DEPT. 51.42% 52.02% 43.43% -8.59%
158 NAVAJO COUNTY ATTORNEY INVEST. 10.85% 5.00% 5.00% 0.00%
071 NAVAJO COUNTY SHERIFF'S DEPT. 37.67% 44.42% 37.43% -6.99%
154 PIMA COUNTY ATTORNEY INVEST. 43.08% 86.29% 70.02% -16.27%
039 PIMA COUNTY SHERIFF'S DEPT. 43.18% 63.51% 52.85% -10.66%
104 PINAL COUNTY SHERIFF'S DEPT. 54.41% 41.13% 35.63% -5.50%
087 SANTA CRUZ COUNTY SHERIFF'S DEPT. 43.67% 52.48% 43.94% -8.54%
187 YAVAPAI COUNTY ATTORNEY INVEST. -12.21% 5.00% 5.00% 0.00%
098 YAVAPAI COUNTY SHERIFF'S DEPT. 43.46% 52.15% 43.63% -8.52%
034 YUMA COUNTY SHERIFF'S DEPT. 52.85% 40.20% 34.73% -5.47%
FIRE DISTRICTS
162 AVRA VALLEY FIRE DISTRICT 88.10% 17.16% 16.52% -0.64%
219 BLACK CANYON FIRE DISTRICT 91.52% 17.26% 16.47% -0.79%
212 BUCKEYE VALLEY FIRE DISTRICT 87.68% 18.57% 17.78% -0.79%
064 BUCKSKIN FIRE DISTRICT 32.38% 34.97% 29.99% -4.98%
258 CENTRAL AZ FIRE AND MEDICAL 52.61% 43.73% 37.14% -6.59%
249 CHRISTOPHER-KOHL'S FIRE DISTRICT 89.36% 19.10% 18.57% -0.53%
259 COPPER CANYON FIRE AND MEDICAL 70.19% 25.69% 23.24% -2.45%
226 CORONA DE TUCSON FIRE DISTRICT 63.99% 26.81% 24.47% -2.34%
143 DAISY MOUNTAIN FIRE DISTRICT 75.65% 24.50% 22.51% -1.99%
049 DREXEL HEIGHTS FIRE DISTRICT 68.71% 29.99% 26.54% -3.45%
213 ELOY FIRE DISTRICT 72.80% 22.33% 20.64% -1.69%
134 FORT MOJAVE MESA FIRE DISTRICT 55.26% 43.80% 37.30% -6.50%
054 FRY FIRE DISTRICT 43.76% 49.89% 42.13% -7.76%
227 GOLDEN SHORES FIRE DISTRICT 122.95% 14.11% 14.11% 0.00%
142 GOLDEN VALLEY FIRE DISTRICT 76.65% 23.07% 21.39% -1.68%
133 GOLDER RANCH FIRE DISTRICT 68.87% 26.09% 23.62% -2.47%
194 GREEN VALLEY FIRE DISTRICT 61.89% 34.41% 29.94% -4.47%
232 GROOM CREEK FIRE DISTRICT 98.35% 14.32% 14.10% -0.22%
238 HARQUAHALA FIRE DISTRICT 106.30% 14.92% 14.94% 0.02%
192 HEBER-OVERGAARD FIRE DISTRICT 97.69% 17.51% 17.20% -0.31%
193 HELLSGATE FIRE DISTRICT 57.44% 33.79% 29.80% -3.99%
199 HIGHLANDS FIRE DISTRICT 58.06% 33.69% 29.51% -4.18%
252 LAKE MOHAVE RANCHOS FIRE DISTRICT 66.17% 41.53% 34.98% -6.55%
168 MAYER FIRE DISTRICT 74.88% 25.57% 23.29% -2.28%
072 MOHAVE VALLEY FIRE DISTRICT 86.35% 21.87% 20.45% -1.42%
233 MOUNT LEMMON FIRE DISTRICT 99.38% 16.31% 16.05% -0.26%
053 NORTHERN AZ. CONSOLIDATED FIRE DISTRICT #1 57.49% 37.05% 32.40% -4.65%
147 NORTHWEST FIRE DISTRICT 66.12% 30.84% 27.43% -3.41%
244 ORACLE FIRE DISTRICT 107.16% 16.77% 16.76% -0.01%
254 PALOMINAS FIRE DISTRICT 175.09% 14.81% 15.01% 0.20%
145 PICTURE ROCKS FIRE DISTRICT 71.93% 28.98% 25.32% -3.66%
150 PINE-STRAWBERRY FIRE DISTRICT 55.34% 39.16% 33.74% -5.42%
185 PINETOP FIRE DISTRICT 54.99% 33.29% 29.24% -4.05%
207 PINEWOOD FIRE DISTRICT 55.19% 30.45% 27.13% -3.32%
256 PONDEROSA FIRE DISTRICT 94.13% 12.78% 12.59% -0.19%

Page 16
PSPRS Employer Contribution Rates (Pension + Health)
Comparison of 20- and 30-year Amortizations of Unfunded (as of June 30, 2016 for July 1, 2017)
20-Year 30-Year
Division Name Funded Rate Rate ∆
221 QUARTZSITE FIRE DISTRICT 80.52% 19.58% 18.37% -1.21%
251 QUEEN VALLEY FIRE DISTRICT 84.04% 22.57% 21.53% -1.04%
208 RINCON VALLEY FIRE DISTRICT 86.11% 19.21% 18.33% -0.88%
200 RIO RICO FIRE DISTRICT 96.93% 16.35% 16.03% -0.32%
222 RIO VERDE FIRE DISTRICT 72.91% 31.59% 27.87% -3.72%
166 SEDONA FIRE DISTRICT 56.07% 34.85% 30.37% -4.48%
195 SUMMIT FIRE DISTRICT 68.04% 29.39% 26.04% -3.35%
177 SUN CITY FIRE DISTRICT 44.89% 55.94% 46.54% -9.40%
170 NORTH COUNTY FIRE & MEDICAL 56.53% 35.68% 30.92% -4.76%
155 SUN LAKES FIRE DISTRICT 67.83% 31.75% 27.95% -3.80%
255 SUN SITES PEARCE FIRE DISTRICT 120.49% 12.59% 12.97% 0.38%
148 SUPERSTITION FIRE AND MEDICAL DISTRICT 68.49% 29.10% 25.88% -3.22%
188 THREE POINTS FIRE DISTRICT 71.01% 25.90% 23.55% -2.35%
257 TIMBER MESA FIRE AND MEDICAL DIST 82.75% 20.81% 19.62% -1.19%
209 TONOPAH VALLEY FIRE DISTRICT 124.47% 15.65% 15.69% 0.04%
201 TRI-CITY FIRE DISTRICT 77.97% 20.42% 19.16% -1.26%
172 TUBAC FIRE DISTRICT 78.90% 25.77% 23.60% -2.17%
203 VERDE VALLEY FIRE DISTRICT 73.81% 26.06% 23.55% -2.51%
250 WHETSTONE FIRE DISTRICT 182.16% 12.37% 12.64% 0.27%
237 WILLIAMSON VALLEY FIRE DISTRICT 98.08% 13.64% 13.47% -0.17%
241 WITTMANN FIRE DISTRICT 88.57% 19.01% 18.36% -0.65%
CITIES & TOWNS
070 APACHE JUNCTION POLICE DEPT. 37.19% 53.29% 44.70% -8.59%
059 AVONDALE FIRE DEPT. 72.60% 25.74% 23.40% -2.34%
139 AVONDALE POLICE DEPT. 62.00% 27.45% 24.55% -2.90%
245 BENSON FIRE DEPT. 79.34% 33.67% 30.41% -3.26%
037 BENSON POLICE DEPT. 51.91% 34.17% 29.46% -4.71%
001 BISBEE FIRE DEPT. 7.53% 83.71% 67.62% -16.09%
038 BISBEE POLICE DEPT. 14.82% 134.54% 107.05% -27.49%
190 BUCKEYE FIRE DEPT. 77.13% 21.81% 20.36% -1.45%
106 BUCKEYE POLICE DEPT. 62.73% 26.61% 24.08% -2.53%
044 BULLHEAD CITY FIRE DEPT. 64.34% 40.83% 34.87% -5.96%
114 BULLHEAD CITY POLICE DEPT. 50.94% 47.59% 40.14% -7.45%
121 CAMP VERDE MARSHALS 63.08% 33.57% 29.40% -4.17%
002 CASA GRANDE FIRE DEPT. 54.51% 39.96% 34.36% -5.60%
003 CASA GRANDE POLICE DEPT. 40.76% 49.29% 41.50% -7.79%
229 CAVE CREEK MARSHALS 70.83% 24.89% 22.82% -2.07%
004 CHANDLER FIRE DEPT. 61.53% 37.09% 32.09% -5.00%
005 CHANDLER POLICE DEPT. 53.43% 42.22% 36.04% -6.18%
109 CHINO VALLEY POLICE DEPT. 62.25% 33.55% 29.38% -4.17%
228 CITY OF MARICOPA FIRE DEPT. 86.73% 19.44% 18.58% -0.86%
243 CITY OF MARICOPA POLICE DEPT. 89.51% 17.99% 17.39% -0.60%
105 CLARKDALE POLICE DEPT. 63.20% 34.65% 29.96% -4.69%
006 CLIFTON FIRE DEPT. 38.51% 5.00% 5.00% 0.00%
083 CLIFTON POLICE DEPT. 152.66% 13.50% 13.67% 0.17%
239 COOLIDGE FIRE DEPT. 95.72% 16.77% 16.49% -0.28%
085 COOLIDGE POLICE DEPT. 47.75% 39.09% 33.55% -5.54%
102 COTTONWOOD FIRE DEPT. 70.24% 26.61% 24.12% -2.49%
066 COTTONWOOD POLICE DEPT. 39.06% 47.60% 40.21% -7.39%
246 DESERT HILLS FIRE DEPT. 78.87% 18.53% 17.58% -0.95%
008 DOUGLAS FIRE DEPT. 30.03% 64.01% 53.06% -10.95%
009 DOUGLAS POLICE DEPT. 34.54% 65.82% 54.19% -11.63%
089 EAGAR POLICE DEPT. 44.50% 78.31% 63.79% -14.52%
127 EL MIRAGE FIRE DEPT. 78.87% 21.61% 20.10% -1.51%
093 EL MIRAGE POLICE DEPT. 56.17% 32.60% 28.64% -3.96%
079 ELOY POLICE DEPT. 63.89% 34.70% 30.19% -4.51%
010 FLAGSTAFF FIRE DEPT. 39.71% 75.11% 61.62% -13.49%
011 FLAGSTAFF POLICE DEPT. 38.83% 54.73% 45.54% -9.19%
176 FLORENCE FIRE DEPT. 99.56% 15.88% 15.64% -0.24%

Page 17
PSPRS Employer Contribution Rates (Pension + Health)
Comparison of 20- and 30-year Amortizations of Unfunded (as of June 30, 2016 for July 1, 2017)
20-Year 30-Year
Division Name Funded Rate Rate ∆
091 FLORENCE POLICE DEPT. 88.60% 19.92% 19.09% -0.83%
055 FREDONIA MARSHALS 91.96% 22.22% 20.84% -1.38%
149 GILBERT FIRE DEPT. 79.21% 23.49% 21.61% -1.88%
081 GILBERT POLICE DEPT. 60.50% 33.69% 29.54% -4.15%
012 GLENDALE FIRE DEPT. 58.40% 42.08% 36.20% -5.88%
013 GLENDALE POLICE DEPT. 47.80% 45.38% 38.54% -6.84%
014 GLOBE FIRE DEPT. 39.96% 61.82% 51.09% -10.73%
131 GLOBE POLICE DEPT. 38.74% 64.10% 53.03% -11.07%
136 GOODYEAR FIRE DEPT. 73.09% 24.57% 22.42% -2.15%
137 GOODYEAR POLICE DEPT. 62.89% 29.93% 26.63% -3.30%
167 GUADALUPE FIRE DEPT. 51.93% 36.69% 31.78% -4.91%
178 HAYDEN POLICE DEPT. 309.46% 16.43% 16.65% 0.22%
086 HOLBROOK POLICE DEPT. 27.03% 77.36% 62.83% -14.53%
253 HUACHUCA CITY POLICE DEPT. 64.37% 26.96% 25.07% -1.89%
210 JEROME POLICE DEPT. 134.68% 17.43% 17.51% 0.08%
156 KEARNY POLICE DEPT. 59.37% 74.13% 60.60% -13.53%
015 KINGMAN FIRE DEPT. 55.08% 44.30% 37.72% -6.58%
040 KINGMAN POLICE DEPT. 51.61% 43.09% 36.61% -6.48%
042 LAKE HAVASU CITY FIRE DEPT. 45.47% 49.42% 41.61% -7.81%
067 LAKE HAVASU CITY POLICE DEPT. 43.92% 54.85% 45.76% -9.09%
130 MAMMOTH POLICE DEPT. 108.56% 14.85% 14.85% 0.00%
107 MARANA POLICE DEPT. 58.82% 33.10% 29.06% -4.04%
017 MESA FIRE DEPT. 51.68% 52.26% 44.04% -8.22%
018 MESA POLICE DEPT. 48.29% 54.86% 46.17% -8.69%
116 MIAMI POLICE DEPT. 57.99% 42.60% 36.40% -6.20%
020 NOGALES FIRE DEPT. 47.87% 50.64% 42.79% -7.85%
080 NOGALES POLICE DEPT. 53.49% 44.76% 38.22% -6.54%
122 ORO VALLEY POLICE DEPT. 61.47% 34.85% 30.49% -4.36%
097 PAGE FIRE DEPT. 79.14% 18.52% 17.45% -1.07%
096 PAGE POLICE DEPT. 57.88% 37.11% 31.82% -5.29%
076 PARADISE VALLEY POLICE DEPT. 32.72% 67.89% 55.77% -12.12%
060 PARKER POLICE DEPT. 66.32% 31.06% 27.42% -3.64%
128 PATAGONIA MARSHALS 55.92% 47.85% 41.48% -6.37%
051 PAYSON FIRE DEPT. 53.65% 35.83% 30.93% -4.90%
052 PAYSON POLICE DEPT. 32.50% 79.18% 64.66% -14.52%
073 PEORIA FIRE DEPT. 66.92% 31.69% 27.97% -3.72%
074 PEORIA POLICE DEPT. 52.66% 41.56% 35.52% -6.04%
021 PHOENIX FIRE DEPT. 46.86% 62.69% 52.09% -10.60%
022 PHOENIX POLICE DEPT. 44.59% 67.30% 55.81% -11.49%
100 PIMA POLICE DEPT. 183.34% 16.07% 16.17% 0.10%
113 PINETOP-LAKESIDE POLICE DEPT. 33.38% 67.31% 55.40% -11.91%
023 PRESCOTT FIRE DEPT. 36.04% 91.61% 73.90% -17.71%
024 PRESCOTT POLICE DEPT. 24.94% 85.43% 69.21% -16.22%
088 PRESCOTT VALLEY POLICE DEPT. 61.45% 33.78% 29.54% -4.24%
144 QUARTZSITE POLICE DEPT. 86.44% 22.93% 21.03% -1.90%
247 QUEEN CREEK FIRE DEPT. 96.02% 15.99% 15.62% -0.37%
047 SAFFORD POLICE DEPT. 34.51% 63.68% 52.72% -10.96%
174 SAHUARITA POLICE DEPT. 82.34% 21.56% 20.25% -1.31%
163 SAN LUIS FIRE DEPT. 83.32% 20.04% 18.95% -1.09%
095 SAN LUIS POLICE DEPT. 68.50% 25.42% 23.05% -2.37%
223 SCOTTSDALE FIRE DEPT. 93.37% 17.63% 17.05% -0.58%
025 SCOTTSDALE POLICE DEPT. 53.11% 47.58% 40.56% -7.02%
129 SEDONA POLICE DEPT. 60.56% 33.97% 29.51% -4.46%
078 SHOW LOW POLICE DEPT. 52.56% 40.08% 34.27% -5.81%
026 SIERRA VISTA FIRE DEPT. 51.52% 46.36% 39.16% -7.20%
036 SIERRA VISTA POLICE DEPT. 41.20% 51.15% 43.08% -8.07%
065 SNOWFLAKE POLICE DEPT. 46.79% 42.20% 36.07% -6.13%
171 SOMERTON FIRE DEPT. 69.21% 28.36% 25.62% -2.74%
169 SOMERTON POLICE DEPT. 66.31% 29.21% 26.02% -3.19%

Page 18
PSPRS Employer Contribution Rates (Pension + Health)
Comparison of 20- and 30-year Amortizations of Unfunded (as of June 30, 2016 for July 1, 2017)
20-Year 30-Year
Division Name Funded Rate Rate ∆
248 SONOITA ELGIN FIRE DEPT. 115.13% 15.10% 15.14% 0.04%
058 SOUTH TUCSON FIRE DEPT. 38.71% 161.32% 127.35% -33.97%
069 SOUTH TUCSON POLICE DEPT. 7.57% 83.77% 68.10% -15.67%
092 SPRINGERVILLE POLICE DEPT. 67.65% 40.43% 34.51% -5.92%
153 ST. JOHNS POLICE DEPT. 73.08% 25.76% 23.14% -2.62%
094 SUPERIOR POLICE DEPT. 69.40% 27.49% 24.92% -2.57%
120 SURPRISE FIRE DEPT. 72.13% 24.94% 22.75% -2.19%
110 SURPRISE POLICE DEPT. 59.31% 30.84% 27.34% -3.50%
027 TEMPE FIRE DEPT. 45.80% 64.85% 53.77% -11.08%
028 TEMPE POLICE DEPT. 41.01% 56.57% 47.06% -9.51%
117 THATCHER POLICE DEPT. 50.26% 46.31% 38.97% -7.34%
108 TOLLESON FIRE DEPT. 73.01% 28.83% 25.92% -2.91%
090 TOLLESON POLICE DEPT. 58.25% 32.42% 28.61% -3.81%
132 TOMBSTONE MARSHALS 399.63% 9.30% 9.64% 0.34%
216 TOWN OF SUPERIOR FIRE DEPT. 120.67% 15.93% 16.05% 0.12%
029 TUCSON FIRE 33.71% 70.83% 58.34% -12.49%
030 TUCSON POLICE 36.49% 76.88% 63.11% -13.77%
111 WELLTON POLICE DEPT. 33.06% 54.53% 44.93% -9.60%
217 WICKENBURG FIRE DEPT. 78.73% 19.63% 18.56% -1.07%
126 WICKENBURG POLICE DEPT. 47.99% 34.64% 30.00% -4.64%
077 WILLCOX POLICE DEPT. 40.48% 62.76% 51.94% -10.82%
115 WILLIAMS POLICE DEPT. 65.80% 31.06% 27.83% -3.23%
031 WINSLOW FIRE DEPT. 243.45% 11.40% 11.65% 0.25%
050 WINSLOW POLICE DEPT. 61.89% 39.94% 34.06% -5.88%
118 YOUNGTOWN POLICE DEPT. 45.01% 8.00% 8.00% 0.00%
032 YUMA FIRE DEPT. 40.60% 59.80% 49.95% -9.85%
033 YUMA POLICE DEPT. 46.82% 53.43% 44.83% -8.60%
TRIBAL EMPLOYERS
224 AK CHIN INDIAN COMM. FIRE DEPT. 77.46% 20.86% 19.41% -1.45%
225 AK CHIN INDIAN COMM. POLICE DEPT. 87.35% 17.83% 17.19% -0.64%
197 FORT MCDOWELL TRIBAL FIRE DEPT. 98.37% 14.98% 14.58% -0.40%
198 FORT MCDOWELL TRIBAL POLICE DEPT. 93.82% 19.51% 18.76% -0.75%
211 FORT MOJAVE TRIBAL POLICE DEPT. 128.34% 16.31% 16.36% 0.05%
179 GILA RIVER FIRE DEPT. 87.94% 18.71% 17.87% -0.84%
180 GILA RIVER POLICE DEPT. 98.11% 16.24% 15.96% -0.28%
206 HUALAPAI INDIAN TRIBE POLICE DEPT. 93.02% 18.71% 18.22% -0.49%
214 PASCUA YAQUI TRIBE FIRE DEPT. 63.75% 31.15% 27.74% -3.41%
215 PASCUA YAQUI TRIBE POLICE DEPT. 63.04% 28.38% 25.39% -2.99%
181 SALT RIVER PIMA-MARICOPA FIRE 71.95% 26.49% 23.94% -2.55%
182 SALT RIVER PIMA-MARICOPA POLICE 66.27% 25.22% 22.83% -2.39%
231 SAN CARLOS TRIBAL POLICE DEPT. 84.47% 17.95% 17.19% -0.76%
235 TOHONO O'ODHAM NATION FIRE DEPT. 83.53% 20.88% 19.54% -1.34%
236 TOHONO O'ODHAM NATION POLICE DEPT. 80.28% 24.05% 22.15% -1.90%
234 YAVAPAI PRESCOTT TRIBAL POLICE 118.50% 17.07% 17.07% 0.00%
OTHER
124 TUCSON AIRPORT AUTHORITY FIRE DEPT. 32.54% 76.21% 62.26% -13.95%
125 TUCSON AIRPORT AUTHORITY POLICE DEPT. 27.34% 79.66% 64.76% -14.90%
146 PIMA COUNTY COMM. COLLEGE POLICE 54.30% 37.51% 32.27% -5.24%
242 CENTRAL AZ. COLLEGE POLICE DEPT. 67.79% 25.69% 23.67% -2.02%
STATE (NOT ELIGIBLE)
007 DEPT. OF PUBLIC SAFETY 34.64% 86.97% 70.80% -16.17%
035 GAME AND FISH DEPT. 26.17% 104.71% 84.59% -20.12%
041 ASU CAMPUS POLICE 51.00% 39.99% 34.66% -5.33%
045 U OF A CAMPUS POLICE 49.90% 44.37% 37.72% -6.65%
056 NAU CAMPUS POLICE 36.68% 58.75% 48.65% -10.10%
119 DEPT. OF EMER & MILITARY AFF 60.52% 31.22% 27.19% -4.03%
151 ATTORNEY GENERAL INVEST. 30.45% 63.53% 52.44% -11.09%
164 AZ DEPT. LIQ. LIC. & CONTROL INVEST. 37.83% 97.00% 78.45% -18.55%
204 AZ. STATE PARK RANGERS 57.81% 57.35% 47.90% -9.45%

Page 19
RESOLUTION TO REQUEST INCREASED AMORTIZATION PERIOD

WHEREAS the __________________________________________________________1 (“Employer”) employs members
(“Members”) of the Public Safety Personnel Retirement System (“System”);

WHEREAS the System’s enabling legislation, A.R.S. §§ 38-841 et seq., requires Employer to make contributions sufficient
under actuarial valuations to meet both the normal cost for its Members hired before July 1, 2017 plus the actuarially
determined amount required to amortize the unfunded accrued liability on a level percent of compensation basis for its
Members (or participants as defined in § 38-865(7)(a)) over a closed period of not more than 20 years beginning July 1,
2017, as established by the System’s board of trustees (“Board”), except in the event Employer makes a one-time election (an
“Election”) to request that the Board use a closed period of not more than 30 years, so long as certain conditions are satisfied;

WHEREAS to make a one-time Election to request that the Board apply a closed period of up to 30 years for the
amortization of liability attributable to its Members, the Employer must (i) adopt a resolution (“Resolution”) requesting the
longer amortization period and (ii) specify the actuarial valuation date for which the new amortization period is to begin,
which date shall commence, at Employer’s election, on the System’s fiscal year end (June 30) immediately before or
immediately after the date of such Resolution;

WHEREAS it is understood by the Employer that the employer contribution rate reflecting the chosen amortization period
will be effective July 1 in the year following the chosen actuarial valuation date.

WHEREAS as a further condition to make the one-time Election, the Employer must submit a written request for the longer
amortization period, along with its adopted Resolution, to the Board’s administrator (“Administrator”);

WHEREAS Employer wishes to make an Election to increase its amortization period for its Members under the System to
________2 years;

WHEREAS Employer has elected to specify that the actuarial valuation date for which its new amortization period shall
begin shall be the System’s fiscal year end (June 30) immediately _______________3 the date of this Resolution;

WHEREAS Employer believes that, increasing the amortization period for its Members under the System, is in the public
interest and the interest of its Members,

NOW THEREFORE, BE IT RESOLVED, that:

1. The period for amortizing the liability attributable to the Employer’s Members under the System shall be increased to
__________4 years;

2. The aforesaid increase in said amortization period shall begin as of the System’s fiscal year end (June 30) immediately
___________5 the date of this Resolution, which increase will be reflected in the employer contribution rate to begin
July 1 of the year following the chosen actuarial valuation date; and

3. Employer shall submit a written request for the above specified longer amortization period to the Board’s Administrator.

As adopted by the majority vote of Employer at its open meeting held on _____________________, 20____.

By: ______________________________________________

By: ______________________________________________

By: ______________________________________________

1
Insert Employer name
2
Insert number no greater than 30
3
Insert “before” or “after”
4
Insert same number chosen for 2
5
Insert same word chosen for 3

Page 20
Attachment C

December 12, 2016

Mr. Jared A. Smout
Deputy Administrator
Arizona Public Safety Personnel Retirement System
3010 East Camelback Road, Suite 200
Phoenix, Arizona 85016-4416

Re: Arizona Public Safety Personnel Retirement System (PSPRS)
Impact of Using Longer Amortization Periods

Dear Jared:

As requested by the Board Chair last week, we have calculated contribution rates for PSPRS using
different periods to amortize the unfunded actuarial accrued liability (UAAL). The June 30, 2016
valuation amortizes the UAAL as a level percentage of payroll over a period of 20 years. The table
below compares contribution rates from the 2016 valuation, using Phoenix Police and Fire Tier 1 &
2 contribution rates as examples, to results based on:

1. 30-year period for the entire UAAL; and
2. 30-year period for newly established UAAL in the June 30, 2016 valuation in combination
with a 20-year period for previously established UAAL.

Phoenix Police

June 30, 2016
Valuation
30/20 Year
Amortization Period 20 Years 30 Years Combination
Normal Cost 17.52% 17.52% 17.52%
UAAL% 49.78 38.29 47.50
Total Contribution Rate 67.30% 55.81% 65.02%

Phoenix Fire

June 30, 2016
Valuation
30/20 Year
Amortization Period 20 Years 30 Years Combination
Normal Cost 16.78% 16.78% 16.78%
UAAL% 45.91 35.31 44.01
Total Contribution Rate 62.69% 52.09% 60.79%

Page 21
Mr. Jared A. Smout
December 12, 2016
Page 2

Considerations

1. Amortization schedules for various periods have also been prepared using the Phoenix
Police plan as an example and are included as an attachment. As shown on the prior page,
contribution rates decrease as the amortization period is lengthened, but note that the cost of
financing over longer periods results in an increasing amortization payment total under each
scenario (totals taken from the amortization schedules).

Amortization Period 20 Years 25 Years 30 Years
Sum of Amortization
Payments $3.5 billion $4.2 billion $5.0 billion

2. In addition, increasing the amortization period serves to extend the length of time over
which the amount of outstanding UAAL increases before being paid down. Under the
current amortization period, the UAAL increases for 3 years before decreasing thereafter to
zero at the end of 20 years. Under the 30-year amortization period, the UAAL increases for
13 years, then decreases thereafter.
3. As we discussed with the Board at the October 2014 Board meeting, the Conference of
Consulting Actuaries published a whitepaper on funding methods that generally encourages
shorter amortization periods (up to 25 years) to address the issue of increasing UAAL, and
to discourage lower funded plans from decreasing contributions.
4. While not an issue for Phoenix in this analysis, other PSPRS plans may likely have a
decrease in contributions from one year to the next under a 30-year amortization, especially
very poorly funded plans.

Data, Methods, and Assumptions

The calculations above are based on the data, methods, and assumptions used for the June 30, 2016
actuarial valuation, including 7.50% annual market returns. A number of risk areas effect the actual
future contributions for the Retirement System. Some key risk areas are investment returns, salary
growth, life expectancy and all other demographic experience, all of which can have a significant
effect on future results.

Page 22
Mr. Jared A. Smout
December 12, 2016
Page 3

Mark Buis and James D. Anderson are Members of the American Academy of Actuaries and meet
the Qualification Standards of the American Academy of Actuaries (MAAA) to render the actuarial
opinions contained herein. This communication shall not be construed to provide tax advice, legal
advice or investment advice.

Your comments and questions are welcome.

Sincerely,

Mark Buis, FSA, EA, MAAA

James D. Anderson, FSA, EA, MAAA

MB/JDA:dj
Enclosure

cc: Brian Tobin, PSPRS Board of Trustees Chair
Francois Pieterse, GRS

Page 23
Phoenix Police Illustrative Amortization Schedules

Closed Amortization Period (20 year period) Closed Amortization Period (25 year period) Closed Amortization Period (30 year period)
Year Period UAAL Payment($) Period UAAL Payment($) Period UAAL Payment($)
2016 20 1,678,743,941 117,016,220 25 1,678,743,941 100,659,385 30 1,678,743,941 89,998,071
2017 19 1,683,298,296 121,696,868 24 1,700,261,119 104,685,761 29 1,711,317,414 93,597,994
2018 18 1,683,340,170 126,564,743 23 1,719,216,540 108,873,191 28 1,742,600,605 97,341,913
2019 17 1,678,336,965 131,627,333 22 1,735,251,051 113,228,119 27 1,772,347,410 101,235,590
2020 16 1,667,708,370 136,892,426 21 1,747,971,882 117,757,244 26 1,800,287,296 105,285,014
2021 15 1,650,822,477 142,368,123 20 1,756,949,855 122,467,534 25 1,826,123,227 109,496,414
2022 14 1,626,991,580 148,062,848 19 1,761,716,379 127,366,235 24 1,849,529,427 113,876,271
2023 13 1,595,467,663 153,985,362 18 1,761,760,203 132,460,884 23 1,870,148,972 118,431,322
2024 12 1,555,437,521 160,144,776 17 1,756,523,919 137,759,320 22 1,887,591,175 123,168,574
2025 11 1,506,017,509 166,550,567 16 1,745,400,181 143,269,692 21 1,901,428,785 128,095,317
2026 10 1,446,247,883 173,212,590 15 1,727,727,642 149,000,480 20 1,911,194,947 133,219,130
2027 9 1,375,086,698 180,141,094 14 1,702,786,560 154,960,499 19 1,916,379,931 138,547,895
2028 8 1,291,403,233 187,346,738 13 1,669,794,070 161,158,919 18 1,916,427,603 144,089,811
2029 7 1,193,970,910 194,840,607 12 1,627,899,085 167,605,276 17 1,910,731,618 149,853,404
2030 6 1,081,459,659 202,634,231 11 1,576,176,794 174,309,487 16 1,898,631,311 155,847,540

Page 24
2031 5 952,427,702 210,739,601 10 1,513,622,743 181,281,867 15 1,879,407,275 162,081,441
2032 4 805,312,691 219,169,185 9 1,439,146,445 188,533,141 14 1,852,276,580 168,564,699
2033 3 638,422,171 227,935,952 8 1,351,564,504 196,074,467 13 1,816,387,634 175,307,287
2034 2 449,923,302 237,053,390 7 1,249,593,202 203,917,446 12 1,770,814,629 182,319,578
2035 1 237,831,798 246,535,526 6 1,131,840,506 212,074,143 11 1,714,551,566 189,612,361
2036 5 996,797,470 220,557,109 10 1,646,505,807 197,196,856
2037 4 842,828,963 229,379,393 9 1,565,491,130 205,084,730
2038 3 668,163,686 238,554,569 8 1,470,220,248 213,288,119
2039 2 470,883,415 248,096,752 7 1,359,296,742 221,819,644
2040 1 248,911,422 258,020,622 6 1,231,206,371 230,692,430
2041 5 1,084,307,718 239,920,127
2042 4 916,822,100 249,516,932
2043 3 726,822,714 259,497,609
2044 2 512,222,931 269,877,514
2045 1 270,763,705 280,672,614
2046 0 -
Sum of Payments $ 3,484,518,179 $ 4,192,051,536 $ 5,047,536,203

December 12, 2016 -1-
Attachment D

June 6, 2017

Mr. Jared A. Smout
Deputy Administrator
Arizona Public Safety Personnel Retirement System
3010 East Camelback Road, Suite 200
Phoenix, Arizona 85016-4416

Re: Arizona Public Safety Personnel Retirement System (PSPRS)
Impact of Using Longer Amortization Periods

Dear Jared:

As requested, we have calculated contribution rates for Phoenix Fire using different periods to
amortize the unfunded actuarial accrued liability (UAAL). The June 30, 2016 valuation amortizes
the UAAL as a level percentage of payroll over a period of 20 years. The table below compares
contribution rates from the 2016 valuation, using Phoenix Fire Tier 1 & 2 contribution rates as
examples, to results based on:

1. 30-year period for the entire UAAL; and
2. 30-year period for newly established UAAL in the June 30, 2016 valuation in combination
with a 20-year period for previously established UAAL.

Phoenix Fire

June 30, 2016
Valuation
30/20 Year
Amortization Period 20 Years 30 Years Combination
Normal Cost 16.78% 16.78% 16.78%
UAAL% 45.91 35.31 44.01
Total Contribution Rate 62.69% 52.09% 60.79%

Page 25
Mr. Jared A. Smout
June 6, 2017
Page 2

Considerations

1. Amortization schedules for various periods have also been prepared using the Phoenix Fire
plan as an example and are included as an attachment. As shown on the prior page,
contribution rates decrease as the amortization period is lengthened, but note that the cost of
financing over longer periods results in an increasing amortization payment total under each
scenario (totals taken from the amortization schedules).

Amortization Period 20 Years 25 Years 30 Years
Sum of Amortization
Payments $1.77 billion $2.13 billion $2.57 billion

2. In addition, increasing the amortization period serves to extend the length of time over
which the amount of outstanding UAAL increases before being paid down. Under the
current amortization period, the UAAL increases for 3 years before decreasing thereafter to
zero at the end of 20 years. Under the 30-year amortization period, the UAAL increases for
13 years, then decreases thereafter.
3. As we discussed with the Board at the October 2014 Board meeting, the Conference of
Consulting Actuaries published a whitepaper on funding methods that generally encourages
shorter amortization periods (up to 25 years) to address the issue of increasing UAAL, and
to discourage lower funded plans from decreasing contributions.
4. While not an issue for Phoenix in this analysis, other PSPRS plans may likely have a
decrease in contributions from one year to the next under a 30-year amortization, especially
very poorly funded plans.

Data, Methods, and Assumptions

The calculations above are based on the data, methods, and assumptions used for the June 30, 2016
actuarial valuation, including 7.50% annual market returns. A number of risk areas effect the actual
future contributions for the Retirement System. Some key risk areas are investment returns, salary
growth, life expectancy and all other demographic experience, all of which can have a significant
effect on future results.

Page 26
Mr. Jared A. Smout
June 6, 2017
Page 3

Mark Buis and James D. Anderson are Members of the American Academy of Actuaries and meet
the Qualification Standards of the American Academy of Actuaries (MAAA) to render the actuarial
opinions contained herein. This communication shall not be construed to provide tax advice, legal
advice or investment advice.

Your comments and questions are welcome.

Sincerely,

Mark Buis, FSA, EA, MAAA

James D. Anderson, FSA, EA, MAAA

MB/JDA:dj
Enclosure

cc: Brian Tobin, PSPRS Board of Trustees Chair
Francois Pieterse, GRS

Page 27
Phoenix Fire Illustrative Amortization Schedules

Closed Amortization Period (20 year period) Closed Amortization Period (25 year period) Closed Amortization Period (30 year period)
Year Period UAAL Payment($) Period UAAL Payment($) Period UAAL Payment($)
2016 20 853,856,343 59,517,738 25 853,856,343 51,198,192 30 853,856,343 45,775,548
2017 19 856,172,816 61,898,447 24 864,800,584 53,246,120 29 870,424,127 47,606,570
2018 18 856,194,114 64,374,385 23 874,441,844 55,375,965 28 886,335,637 49,510,833
2019 17 853,649,343 66,949,360 22 882,597,447 57,591,003 27 901,465,698 51,491,266
2020 16 848,243,342 69,627,335 21 889,067,619 59,894,643 26 915,676,709 53,550,917
2021 15 839,654,702 72,412,428 20 893,634,068 62,290,429 25 928,817,589 55,692,953
2022 14 827,533,638 75,308,925 19 896,058,456 64,782,046 24 940,722,641 57,920,671
2023 13 811,499,688 78,321,282 18 896,080,747 67,373,328 23 951,210,320 60,237,498
2024 12 791,139,233 81,454,134 17 893,417,425 70,068,261 22 960,081,915 62,646,998
2025 11 766,002,826 84,712,299 16 887,759,580 72,870,992 21 967,120,112 65,152,878
2026 10 735,602,315 88,100,791 15 878,770,830 75,785,831 20 972,087,457 67,758,993
2027 9 699,407,736 91,624,822 14 866,085,094 78,817,265 19 974,724,685 70,469,353
2028 8 656,843,974 95,289,815 13 849,304,187 81,969,955 18 974,748,933 73,288,127
2029 7 607,287,157 99,101,408 12 827,995,220 85,248,753 17 971,851,795 76,219,652
2030 6 550,060,773 103,065,464 11 801,687,810 88,658,703 16 965,697,239 79,268,438
2031 5 484,431,494 107,188,083 10 769,871,061 92,205,052 15 955,919,354 82,439,176

Page 28
2032 4 409,604,665 111,475,606 9 731,990,323 95,893,254 14 942,119,920 85,736,743
2033 3 324,719,456 115,934,630 8 687,443,687 99,728,984 13 923,865,793 89,166,212
2034 2 228,843,635 120,572,016 7 635,578,217 103,718,143 12 900,686,082 92,732,861
2035 1 120,967,936 125,394,896 6 575,685,887 107,866,869 11 872,069,107 96,442,175
2036 5 506,999,204 112,181,544 10 837,459,122 100,299,862
2037 4 428,686,495 116,668,805 9 796,252,781 104,311,857
2038 3 339,846,827 121,335,558 8 747,795,333 108,484,331
2039 2 239,504,537 126,188,980 7 691,376,521 112,823,704
2040 1 126,603,344 131,236,539 6 626,226,159 117,336,653
2041 5 551,509,376 122,030,119
2042 4 466,321,484 126,911,323
2043 3 369,682,457 131,987,776
2044 2 260,530,977 137,267,287
2045 1 137,718,029 142,757,979
2046 0 -
Sum of Payments $ 1,772,323,865 $ 2,132,195,213 $ 2,567,318,754

June 6, 2017 -1-