Consistent with state law, the city of Peoria participates in the Public Safety Personnel Retirement System (PSPRS) for all sworn police and fire personnel. Due to numerous factors inside and outside PSPRS, the pension found itself significantly underfunded. PSPRS is analyzed both as a consolidated plan (known as an agent-multiple employer) and as individual plans for each employer agency (Peoria Police is separate from Peoria Fire). As a consolidated plan, PSPRS is 66.3% funded as of June 30, 2023, up from 54.2% funded as of June 30, 2021. Individually, the Peoria Police pension plan is 80.0% funded as of June 30, 2023, up from 58.5% as of June 30, 2021, and the Peoria Fire pension plan is 82.4% funded as of June 30, 2023, up from 71.5% in June 2021. As a PSPRS participant, Peoria must be fully funded (100%) by 2036. Based upon actuarial assumptions this will require a total of $270 million in contributions between 2020 and 2036 to achieve.

In order to reduce this total contribution amount and achieve full funding sooner than 2036, Mayor and Council approved a $30 million lump sum payment to PSPRS in September of 2021, a $5 million lump sum contribution in May of 2022, and a $6 million lump sum contribution in June 2023. These payments, in addition to the Annual Required Contribution (ARC), have accelerated the pay down of unfunded liabilities. Overall, the Police and Fire plans are anticipated to be fully funded 5-7 years ahead of schedule and save approximately $55-$75 million in contributions.   

In Fiscal Year 2024, investment returns are unlikely to reach the PSPRS new, lower, assumed rate of return of 7.1%.  Therefore, an additional lump sum contribution this fiscal year will assist the payoff schedule.  Staff proposes a $3 million lump sum payment to PSPRS to be shared between the Police fund and the Fire fund.

This payment is intended to increase Peoria Police and Peoria Fire pension assets and reduce unfunded liabilities.

Mayor and Council adopted Resolution 2023-78 on June 6, 2023 regarding a pension funding policy and is scheduled to update that policy at this same meeting of May 28, 2024 under the Consent Agenda.

Mayor and Council received and discussed a presentation regarding a paydown strategy for the PSPRS unfunded liabilities at its September 14, 2021 study session. This body approved a lump sum payment for $30 million at its September 28, 2021 regular meeting and a policy of holding the Annual Required Contribution (ARC) constant at the FY23 level until full funding is achieved. Mayor and Council then approved an additional $5 million payment in June 2022 and a third lump sum contribution of $6 million in June 2023.