PHOENIX
— Bryan Jeffries, the chief of Arizona’s firefighters’ association, has
been arguing to anyone who will listen that his members — and the
state’s police officers, too — should volunteer to cut their own pension
benefits.
Mr.
Jeffries, a fourth-generation Arizonan who has been a firefighter and a
city councilor, says that emergency workers have a special obligation
to protect the public not only from physical peril, but also from
financial ruin. Cutting pensions for firefighters and police officers
would help save their woefully underfunded retirement plan and bail out
towns and cities that are struggling to keep up with their mandated
contributions, he says.
“It
is critical for our state, for the taxpayers and for the next
generation that will be here long after we are gone, that we repair
this,” said Mr. Jeffries, whose group, the Professional Fire Fighters of
Arizona, is not a union but works on political issues relevant to its
membership. “I know intellectually that with these ballooning payments, I
feel a direct conflict with the oath I took to protect the citizens.”
His
unusual proposal has been a touchy subject for many of the people whose
pensions would be cut, because defined benefit pension plans are viewed
as compensation for doing dangerous work and a lure to recruit new
public servants. And despite the growing shortfall in the statewide
pension plan that has put stress on cities and towns, which must make up
the difference, politicians have been nevertheless wary of attacking
these benefits, for fear of alienating two powerful constituencies and
to sidestep questions about why they lavished such generous pensions on
them in the first place.
“When
you see policemen and firemen putting their lives on the line, you want
to make sure that when they retire, they receive a reasonable
retirement,” said Jeff Dial, a Republican state representative from the
Phoenix area who supports the firefighters’ initiative.
But among the 236 employers in Arizona’s $6.1 billion Public Safety Personnel Retirement System,
which covers about 31,000 active and retired emergency workers, just 39
have fully funded pension plans. An additional 21 plans are less than
40 percent funded, a rate so low that if they operated in the private
sector, they would be at risk of being taken over.
The
growing unfunded liabilities have forced cities and towns to pick up
the tab. Tucson, for instance, contributes the equivalent of 51 percent
of its emergency workers’ wages, up from about 11 percent a decade ago.
That means if a firefighter’s salary is $60,000, Tucson must pay about
$30,000 more toward his pension. For most police officers and
firefighters, pensions make up the bulk of their retirement income,
because they do not collect Social Security.
The
Arizona pension system has been eroded by ill-fated investments,
provisions that have steered money to retirees instead of replenishing
the plan, and budget woes that have led cities to cut the size of their
fire and police departments, leaving fewer employees to pay for
retirees. Municipalities forced to pay higher contributions have had to
raise taxes and take other difficult steps.
“The
costs of the plan put additional pressure on budgets, especially when
we’re still trying to recover from the recession,” said Rene Guillen
Jr., a legislative director at the League of Arizona Cities and Towns.
“That could mean that money that could go for raises or new personnel
might have to be redirected for covering the costs of retirements.”
In
2011, Arizona lawmakers passed a law that undid several benefits in the
emergency workers’ pension plan, including one that gave any investment
gains in the fund above 9 percent per year to the retirees instead of
keeping it in the fund as a cushion against the years when it lost
value.
The
law, though, was overturned in court this year because it was ruled to
violate the state’s Constitution, which includes a clause that says that
there cannot be any impairment of benefits in the pension plan.
As
the law was being appealed, financial conditions deteriorated further,
so Mr. Jeffries and his predecessor at the state firefighters’
association, Tim Hill, proposed raising the number of years that new
staff members will need to begin collecting a pension, increasing member
contributions and trimming cost-of-living increases. Mr. Jeffries says
that the measures will save taxpayers tens of millions of dollars and
could return the pension plan to full funding in 18 years.
To
put the plan into effect, Mr. Jeffries wants to change the Constitution
to allow for this one-time fix. This would reassure workers that
lawmakers could not make even more drastic changes later.
Critics, though, call this strategy a half-step.
“If
they were serious and genuine about wanting policy makers to manage
these systems to keep them as opposed to running them off a cliff, then
what they would have advocated for was the removal for the pension
clause” from the Constitution, said Kevin McCarthy, president of the
Arizona Tax Research Association.
Either way, Mr. Jeffries has a lot of work to do before his proposals are acted on.
First,
he must persuade several police groups to agree. Joe Clure, the
president of the Phoenix Law Enforcement Association, which represents
2,400 police officers, has worked with the firefighters on their
initiative, but is wary of moving too hastily. “What you worry about is
it opening Pandora’s box and making all sorts of changes,” Mr. Clure
said. “We are offering up our own haircut.”
Gov.
Jan Brewer declined to call a special session that would have allowed
lawmakers to authorize a ballot measure in November to change the
Constitution. Lawmakers might revisit the issue this year or in 2015,
but Mr. Jeffries said he and the police were willing to collect the
signatures needed to put the constitutional amendment to a vote.
In
the meantime, Mr. Jeffries has hired Ryley Carlock & Applewhite, a
prominent law firm in Phoenix, to help him sell his plan. Mr. Jeffries
has visited fire stations around the state where, he says, he has
received little pushback from members. City managers and mayors, some of
whom have been hamstrung by the pension crisis, have also welcomed the
proposals.
“Pensions
are not sexy things or easy to sell to voters,” said Fritz Behring, the
city manager of Scottsdale, who favors the firefighters’ plan, even
though his city is in relatively secure financial shape. “The average
citizen doesn’t have those benefits and resents it. If voters have a
choice to cut benefits, they will.”
In
many parts in the country, police and firefighter unions have fended
off efforts to change their pension plans. But emergency workers in
Arizona operate in a right-to-work state where the Legislature has huge
sway, anti-union sentiment runs high and the Tea Party has clamored for
greater fiscal responsibility.
Fueling
the resentment are reports of public servants who retire with six-digit
pensions by exploiting rules that let them cash in unused vacation and
sick days. Sal DiCiccio, a Phoenix councilman who favors giving new city
employees 401(k) plans, published a list of the 50 highest pensions for
retired city public employees.
“The
whole system has been gamed by everyone,” Mr. DiCiccio said. “I’m
supportive of pensions for police and fire, but people don’t expect
that” kind of abuse.
While
the most egregious cases make headlines, most pensions for emergency
workers are modest. The average pension for a staff member (not
including those on disability or paid to survivors) is $52,600, assuming
they worked 23.6 years and were 51.3 years old when they retired,
according to the pension fund administrator.
That
does not include the cost-of-living increases — of up to 4 percent,
compounded annually — or the fact that some emergency workers start
second careers, sometimes in government, that pay them a second pension.
The
possibility that frustrated voters will demand even more drastic
changes drives the firefighters. Mr. Jeffries said his members worried
that “something dramatic is going to happen, and they’ll wake up and
they’ll have nothing.”
No comments:
Post a Comment