PSPRS Is Dark, Disturbing, & Not Viable – The Board Of Trustees Needs To Go
Pensioners First – the Arizona PSPRS public safety pension-
- The worst performer of the state’s pension plans
- Leaves Arizona taxpayers disturbingly vulnerable
- PSPRS has a dark and foreboding future
- Changes are necessary
- The pension system is forcing municipalities to cut services
- PSPRS is not a viable option
- The status quo cannot stand
- Change the decision makers
- Change the Board of Trustees responsible for ALL ASPECTS of this pension plan
- 52,000 pensioners and 6.5 million taxpayers are watching (and now paying extra)!
Opinions » Article
Either reform pensions, or lose them
Our View: Cost of court ruling will be tough to pay
Ken Fields is a retired Maricopa County Superior Court judge and one of two retirees who sued to reinstate the raises. “It was a difficult decision,” he told The Republic, “but it’s not going to be a popular decision.”
Court’s pension ruling could cost taxpayers
By Editorial board – The Arizona Republic Feb 21, 2014
The Arizona Supreme Court just handed an enormous past-due bill to taxpayers.
The state Legislature’s attempt in 2011 to rein in the costs of poorly performing pension plans is unconstitutional, according to the justices. The Arizona constitution forbids reducing public-pension benefits, which effectively means that no matter how high the costs go, taxpayers simply will have to find a way to pay them.
As a result, the pension board will have to pay out $7.9 million to bring the tab current for beneficiaries of the Elected Officials’ Retirement Plan, a part of the state’s worst performing pension trust, the Public Safety Personnel Retirement System.
The ruling also applies to other beneficiaries of the PSPRS whose benefits were temporarily curtailed. That adds another $32.1 million for retroactive raises. The system will set aside $335.6 million to fund cost-of-living adjustments going forward.
That’s big money. And the cost to taxpayers will go way up in the near future, which in some hard-pressed communities will mean fewer cops on the streets and fewer services. That is a worrisome trend.
The 5-0 Supreme Court decision may be perfectly rational and predictable — a constitutionally guaranteed promise made must be kept, after all. But it leaves Arizona taxpayers in a position of disturbing vulnerability, one that begs for a constitutional amendment that will allow lawmakers to make the sorts of changes the justices now say they cannot.
A primary advocate for pension-plan reform, Rep. John Kavanagh, R-Fountain Hills, says he would like to see a referendum on the fall ballot to amend the constitution to allow that sort of legislative action.
The dark, foreboding future hanging over Arizona’s poorly funded public-employee pension plans tells us such changes are necessary.
As reported by the Arizona Republic’s Craig Harris, contributions to the shaky PSPRS by employers (meaning: the governments whose elected officials, judges and public-safety personnel are participants in the plans) have increased to $451 million a year in the past decade, a 425 percent increase. Despite that enormous level of underwriting from taxpayers, the trust still is underfunded by $5.7 billion, the worst condition of any of the state’s three pension trusts.
Promised cost-of-living raises only exacerbate an already rickety system. Keeping employee contributions incredibly low shifts the responsiblity for bringing the systems back to solvency fully on taxpayers.
A retirement system that forces communities to expend ever greater resources on retirement payouts rather than on cops on the street is not a viable option.
Without sensible reform, another option even more unpalatable to government workers becomes more possible: Lawmakers simply could abandon defined-benefit retirement plans in favor of defined-contribution plans, similar to the private sector’s 401(k) plans. Newly appointed judges and elected officials now are under such a plan.
Those appear to be the choices: Create a constitutional path to pension reform, or deal with the prospect of the only other option available. The status quo cannot stand.