Arizona Public Safety Pension Board Seeks Special Session
Arizona pension board seeks special session
Craig Harris, The Republic | azcentral.com
The Public Safety Personnel Retirement System board on Thursday asked Gov. Jan Brewer to call a special session and have lawmakers again try to fix the financially troubled retirement system for police officers and firefighters.
The board, in a 6-1 vote, sought help to improve the trust’s “funded levels” with reasonable limits on increases to retirement benefits. Lauren Kingry voted no, saying he didn’t have enough information.
The board did not agree on a specific blueprint and did not endorse a plan pushed by the Professional Fire Fighters of Arizona that would have public-safety officers pay more and have cost-of-living adjustments temporarily suspended for retirees.
Andrew Wilder, Brewer’s spokesman, said no decisions or agreements have been made by the governor, though he has indicated Brewer was open to calling a special session. Were Brewer to call a special session, lawmakers would likely refer the matter to the voters this fall.
The board members agreed that one of the biggest problems facing the trust, which also provides retirement benefits for elected officials and corrections officers, is expensive cost-of-living adjustments that the state Supreme Court earlier this year reinstated for all PSPRS retirees.
It also was announced that the trust next week would follow through on the Supreme Court ruling and pay nearly $24.6 million in suspended cost-of-living adjustments to 14,598 retirees.
The 2011 Legislature, as part of sweeping pension reform, suspended COLA increases for all PSPRS retirees and required public-safety officers to make larger payments into the trust to improve its financial health.
The Legislature’s changes were challenged in court, and the Supreme Court in February ruled, after a lawsuit from two retired judges, that temporarily stopping COLAs was unconstitutional. There’s concern among PSPRS officials that having employees make larger contributions also could be overturned, and that’s why board members say a special session is needed.
The average COLA payment is $1,684, according to PSPRS, but judges and those in the Elected Officials Retirement Plan will receive an average payment of $6,288, according to trust records.
The trust also plans to transfer an additional $209 million into an account for future permanent benefit increases.
The trust, after the Supreme Court ruling, had initially projected that it would cost $40 million this summer to pay suspended COLAs and that $335 million more would be needed to fund cost-of-living adjustments going forward.
Steve Meissner, a trust spokesman, said the larger figures were early estimates but said the overall cost could increase, based on a court ruling on another challenge to the 2011 pension reform.
Trust Chairman Brian Tobin, a Phoenix deputy fire chief, said retirees are legally entitled to their checks. But he also said the board knows “we need to fix the system.” He added it was in the best interest of taxpayers and beneficiaries to improve the trust’s financial health.
Though the trust is currently valued at $7.9 billion, government employers — through tax dollars — for more than a decade have been required to back-fill a trust that has been hurt by investment losses and benefit increases. Though the trust is in no immediate danger, it is far short of the money needed to pay all liabilities and has low funded levels.
The funded ratio — the percentage of pension-fund liabilities that could be paid with current assets — is about 57 percent for the pension fund dedicated to police and firefighters. As funded ratios drop, more money is needed from taxpayers to shore up the trust. It is about 55 percent for the elected officials trust and nearly 67 percent for corrections officers.
Nearly 15,000 retirees in the Public Safety Personnel Retirement System who had cost-of-living adjustments suspended will have them repaid next week as part of a Supreme Court order, according to PSPRS. Here are the number of retirees and average payments:
PSPRS (Public Safety): 10,123 retirees; $1,348 payment.
CORP (Correctional Officers) 3,431 retirees; $1,275 payment.
EORP (Elected Officials) 1,044 retirees; $6,288 payment.