City Council adopts PSPRS pension funding policy amid unfunded liability concerns

In a recent Phoenix City Council meeting held on June 18, 2025, significant discussions centered around the city's pension funding policy and its implications for public safety personnel. The council unanimously approved the proposed pension funding policy for the Public Safety Personnel Retirement System (PSPRS), which is crucial for ensuring the financial stability of retirement benefits for police and fire personnel.

Councilwoman Hernandez raised important questions regarding the PSPRS, particularly highlighting the system's current unfunded liability, which stands at approximately 45% for police. The council was informed that the city aims to fully fund the PSPRS by the fiscal year 2041-2042, contingent on various financial assumptions holding true. These assumptions include payroll growth, investment earnings, and mortality rates, all of which can significantly impact the unfunded liability.

A key point of concern discussed was the potential for increased unfunded liabilities if the city fails to meet its financial targets. The council learned that if contributions and investment returns do not align with the required payments, the unfunded liability could grow, necessitating higher future contributions from the city.

Additionally, the meeting addressed the ongoing financial challenges related to homelessness services. The council discussed an amendment to a contract with Human Services Campus Incorporated, which provides vital services to the homeless population. The Vice Mayor proposed to continue discussions on this item until the next meeting, emphasizing the need for careful consideration of the nearly $27 million in ongoing costs associated with these services.

Overall, the meeting underscored the city's commitment to addressing both pension funding for public safety personnel and the pressing issue of homelessness. As the council moves forward, the implications of these discussions will be closely monitored, particularly regarding the financial health of the PSPRS and the city's ability to provide essential services to its most vulnerable residents.