Gilbert Office of Management & Budget Performance Management

Pension Funding

Pension funding is a critical aspect of ensuring the financial security of public employees, including police officers, firefighters, teachers, and government workers. In Arizona, the Public Safety Personnel Retirement System (PSPRS) and the Arizona State Retirement System (ASRS) play vital roles in providing retirement benefits to these employees.

Established in Arizona in 1968, the Public Safety Personnel Retirement System (PSPRS) provides pensions and benefits to ensure the long-term financial security of police officers, firefighters, and correctional officers.

Employees joining PSPRS on or after July 1, 2017, are part of the Tier 3 benefits. Tier 3 is a pooled system with employees from many municipalities across the state, including Gilbert, participating together. Tier 1 and Tier 2 are not pooled, and Gilbert is responsible for maintaining the funding balance between promised benefits and available assets. The funding ratio indicates the amount of assets already available in the PSPRS trust to pay future benefits.

The Arizona State Retirement System (ASRS) is a pension plan for Arizona’s public employees, including teachers, state and local government workers, and university employees. Established in Arizona in 1953, the Arizona State Retirement System (ASRS) provides retirement, disability, survivor, and health insurance benefits to its members, funded through contributions from both employees and employers, as well as investments managed by ASRS. 

The Arizona State Retirement System (ASRS) has implemented an innovative process for employers to voluntarily prepay their future pension contribution obligations. The Contribution Prepayment Program (CPP) allows employers to submit a lump-sum payment to the ASRS that may be used to offset the employer portion of future ASRS pension contribution payments. This allows individual employers to improve their funded status in ASRS even though the system is pooled. 

The Town of Gilbert is dedicated to ensuring promised retiree benefits are properly funded in the most fiscally responsible way.

Sound Fiscal Practices 

Fire PSPRS Funding Status

The funding ratio indicates the amount of assets already available in the Fire PSPRS trust to pay future benefits. 

• Goal: Maintain or increase the 90% Funding Ratio
• Target: At or above 90% Funded
• Metric: Funding Ratio 
• Metric Frequency: Annual

Police PSPRS Funding Status

The funding ratio indicates the amount of assets already available in the Police PSPRS trust to pay future benefits. 

• Goal: Maintain or increase the 90% Funding Ratio
• Target: At or above 90% Funded
• Metric: Funding Ratio
• Metric Frequency: Annual

Gilbert PSPRS Funding Status

The funding ratio indicates the amount of assets already available in the Gilbert PSPRS trust to pay future benefits. 

• Goal: Maintain or increase the 90% Funding Ratio
• Target: At or above 90% Funded 
• Metric: Funding Ratio
• Metric Frequency: Annual  

ASRS Pension Funding Status

The Town of Gilbert leverages the Contribution Prepayment Program (CPP) to submit a lump-sum payment to the ASRS that may be used to offset the employer portion of future ASRS pension contribution payments. 

• Goal: Maintain or increase the 90% Funding Ratio
• Target: At or above 90% Funded
• Metric: Funding Ratio
• Metric Frequency: Annual  

Zero Base Savings

Gilbert reviews the supplies and contractual budgets for one-third of the organization each fiscal year, which allows the entire Town to be reviewed once every three years. 

Through this process, all expenses must be justified based on history and current levels of approved service. The Office of Management and Budget (OMB) analyzes each budget line item based on historical spending and current service levels. OMB then collaborates with the participating departments to establish a final recommendation. These final recommendations are summarized and presented to the Executive Team and Town Council. 

Continuing to reset department budgets through zero-base budgeting helps ensure that resources are correctly aligned with the costs needed to deliver approved service levels. Any savings are appropriated back to the fund level and are then available to fund budget requests when the budget is built for the following fiscal year.  

Sound Fiscal Practices

Zero Base Savings

• Goal: Complete the Zero Base Process for 1/3 of the Organization Annually and complete 100% of the Organization every three years  
• Target: 1/3 of the organization completes the Zero Base Process annually
• Metric: Amount Saved ($)  
• Metric Frequency: Annual

Debt Savings

 Gilbert strategically uses long-term debt for essential capital projects while prioritizing cash flow finGilbert strategically uses long-term debt for essential capital projects while prioritizing cash flow financing whenever possible.

• General Obligation (GO)  Bonds: Bonds that are backed by the full faith and credit of the Town and are repaid using secondary property taxes.
• Municipal Property Corporation (MPC) Bonds: A non-profit corporation created by the Town as a financing mechanism for the purpose of financing the construction or acquisition of Town capital improvement projects. The MPC is governed by a board of citizens appointed by the Council.
• Street and Highway User Revenue (HURF) Bonds: These are special revenue bonds issued specifically to construct street and highway projects.

Gilbert constantly monitors the debt portfolio for restructuring or refinancing opportunities

Sound Fiscal Practices 

Savings From Refinancing to Lower Interest Rates

• Goal: Gilbert will refinance debts using all reasonable opportunities 
• Target: Gilbert will refinance debts using all reasonable opportunities 
• Metrics: Amount of Savings ($)
• Metric Frequency: When Available
  

Debt Paid Off Early

• Goal: Gilbert will pay down debts using all reasonable opportunities
• Target: Gilbert will pay down debts using all reasonable opportunities
• Metrics: Defeased Amount ($)
• Metric Frequency: When Available