Prescott Gets Pension Costs For Hotshot Rulings
4/4/2015 Cindy Barks The Daily Courier
PRESCOTT – The City of Prescott reportedly will face additional retirement costs of more than $100,000 per year stemming from the recent rulings on the survivor benefits for three families of fallen Hotshots.
In the wake of the Prescott City Council’s March 10 decision not to appeal the award of survivor benefits to the families of Andrew Ashcraft, Sean Misner, and William Warneke, the Public Safety Personnel Retirement System (PSPRS) supplied the city with estimates on liability for the Hotshots.
Although officials caution that the figures are still estimates, the projected annual cost for the three Hotshots totals $115,705.
The information that PSPRS provided to the city includes a number of categories, ranging from the wages paid to the Hotshots, to the estimated annual benefits, to lump-sum payment amounts.
The spreadsheet, which the Daily Courier acquired through a public records request, indicates the city’s annual payments as: $37,595 for Ashcraft; $39,044 for Misner; and $39,066 for Warneke.
The annual PSPRS amounts that the families will receive are higher – $47,796 for Ashcraft; $49,362 for Misner; and $49,362 for Warneke.
Jared Smout, acting administrator for PSPRS, said on Thursday, April 2, that the city’s annual payment amounts differ from the annual PSPRS benefits that the families will receive because of the “assumed investment returns” on the pension assets.
The annual benefit amounts are based on the salaries that the Hotshots were earning before their deaths on June 30, 2013, while fighting the Yarnell Hill wildfire.
Because the Hotshots were killed in the line of duty, Smout said, the survivors receive 100 percent of the average monthly salaries of the fallen Hotshots.
The PSPRS bases the amount on averages, Smout added, so the annual payments differ, depending on how many hours the Hotshots were working in their months of employment.
Prescott Budget and Finance Director Mark Woodfill said the additional annual costs for the Ashcraft, Misner, and Warneke benefits are scheduled to be reflected in the city’s PSPRS costs, starting on July 1, 2016.
Meanwhile, the city also is dealing with rising costs in its general PSPRS costs.
During a mid-fiscal-year presentation to the Prescott City Council in February 2015, officials reported that the city’s pension contributions were expected to rise by anywhere from $327,000 to about $1.3 million in the coming fiscal year – depending on whether the city opts for a three-year phase-in of expected increases.
A city memo explained that the State Legislature adopted pension reform in 2011, but a subsequent court case overturned certain provisions of the pension reform, relating to how permanent benefit increases are calculated.
The city has the option of phasing in the increases that are necessary because of the court ruling. Adoption of the phase-in plan would defer the full impact of the rate increase.
The issue came up again at the City Council’s March 24 meeting, but the council opted to wait until later in the 2015/2016 budget process to decide on the phase-in option.
In total, the city’s pension costs are expected to range between $7 million and $8 million in the next fiscal year. (The 2015/2016 numbers do not include the expected impacts from the Ashcraft, Misner, and Warneke awards, which are expected to be begin to be reflected in the next fiscal year).
Woodfill has noted that the state is studying options for pension reform, and some type of reform is expected in the coming years.
The City Council’s March decision not to appeal the earlier board and court rulings effectively ended the city’s legal challenge of the claims that the families of the three seasonal Hotshots filed soon after the 2013 Yarnell Hill wildfire.
In its 2014 session, the Arizona State Legislature allocated $5 million to cover the cost of the PSPRS retirement benefits for the six full-time Hotshots who died in the Yarnell Fire.
Ashcraft, Misner, and Warneke were among the 13 Hotshots who were considered seasonal by the city.
None of the families of the other victims have filed retirement claims with the city.