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Monday, October 20, 2014

Arizona Horror Story: PSPRS' Fiscal Year 2014 actuarial valuation report

Just in time for Halloween PSPRS has released the annual actuarial valuation report for the fiscal year that ended June 30, 2014.  The report is not available as a stand-alone document and, as of now, is only included in the October 22, 2014 Board of Trustees Meeting Materials.  The document is 400 pages long so navigating is easier if it is opened in the Adobe PDF program.  The report by Gabriel Roeder Smith & Company starts on PDF page 161.

Even for the most pessimistic among us, this report is incredibly bad.  From fiscal year 2013 to fiscal year 2014, PSPRS' aggregate funded ratio dropped from 58.7% to 49.2%.  The aggregate contribution rate that will begin next fiscal year increased from 31.03% to 41.08%.  Shockingly, the reversal of SB 1609's changes to the COLA formulation by the Fields case is responsible for dropping the aggregate funded ratio 6.1% and increasing the aggregate contribution rate 7.17%.  For anyone who is hoping that Parker and Hall are successful in their cases against PSPRS and EORP, respectively, this should make you reconsider.  If you want to know where your particular employer stands, go to PDF page 239 to see individual employer funded ratios and PDF page 245 for individual employer contribution rates for fiscal year 2015.  I, for one, will not be counting on a raise next year.  My employer's contribution rate increased by over 15%, which means that for just me, my employer will need to find another $10,000 in the budget to pay for increases in the unfunded liability.

In the last post, we discussed the Phoenix pension reform initiative, Proposition 487.  I am sure the proponents of Proposition 487 will be bringing up PSPRS' bad numbers to help make their case for ending the City of Phoenix's pension.  We will certainly be discussing this report more in the near future.

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