The Oro Valley Town Council will consider a recommendation by the, Budget and Finance Commission, to spend $10,000,000 of our cash and bond another $17,000,000 (to be paid off over 20 years at approximately $1,200,000 per year), to pay down the "Unfunded Liability" in our Public Safety Pension Plan (PSPRS). Our Town is already around 60% funded and that puts us right in the middle of most other municipalities. There isn't necessarily a problem with the fund; however, the effective interest rate on our unfunded amount is 7.5% so the argument could be made that it can be bonded at about 3%, so it would effectively save the difference of 4.5%. The Town would still have to pay the "annual premium" every year and if history teaches us anything, it's that the "Unfunded Liability" will certainly continue to grow.
The question we residents should be asking is, whether this use of cash and bonding capacity should be the highest priority, especially when considering all of the other needs of the Town.
Hopefully this important discussion will take place before a decision is made. The cost of construction is going up considerably each year so putting off those other needs may increase the costs more than the savings that would result in this payment to PSPRS. This is our money the Council is considering spending; we need to pay attention!
For more information, tune in to the April 7th Council Meeting.