Firefighter’s Pension Fix Won’t Legally Hold Up
Firefighters’ plan to save pensions not popular, may face uphill battle
5-19-2015 Scott Orr The Daily Courier
Although the Professional Fire Fighters of Arizona (PFFA) plan to repair the state’s public service retirement plan was met with smiles of relief from firefighters at a presentation Wednesday, May 13, in Prescott Valley, it may face a tough road to adoption due to opposition by police organizations and retirees.
PFFA President Bryan Jeffries presented a plan to bring fiscal solvency back to a pension plan wracked by poor decisions made by past administrators and a disastrous attempt by the legislature to fix it, which ended up costing $375 million.
As things now stand, Arizona cities, towns and fire districts are being required to pay the Public Service Personnel Retirement System (PSPRS) fund high percentages of their employees’ salaries – Prescott will pay 75 percent for firefighters in 2016. That means if a firefighter makes $50,000 in salary, Prescott will pay $37,500 above that to PSPRS.
The plan Jeffries offered won’t cost taxpayers any money; in fact, it would ultimately save them money – but at least one of the provisions has some retirees unhappy.
In 2011, the state legislature passed a bill to eliminate the 4 percent annual cost of living (COLA) increase paid to retirees. That effort was found to be unconstitutional by the Arizona Supreme Court in 2014.
But the COLA money is still an issue. In an interview with The Daily Courier last month, PSPRS spokesman Christian Palmer said, “It’s an overly generous system and that’s ultimately straining the system as a whole.”
Jeffries said the PFFA wants to make a constitutional change to allow the COLA to be changed, and would fund a 2016 campaign to get it passed.
Jeffries called the COLA “a very rich benefit, to be blunt,” and noted that the more money the PSPRS makes in investment returns, the more it pays in COLAs, or what’s officially called the Permanent Benefit Increase.
“In fact, within 15 years (some retirees) were making more in retirement than they were working,” Jeffries said. “Some of them have actually told me that, watching us (current firefighters) take pay cuts … they felt guilty about that.”
But, he said, “There are some who have pushed back.”
One of those who do not like what he’s hearing is retired firefighter Bill Follette.
“I’m definitely not on board with this,” he said. “Myself and others aren’t in favor of the plan, a lot more than they’re going around saying.
“It won’t hold up legally, in my opinion,” he said. “I’m more than willing to join that lawsuit.”
His complaint is the cut in the COLA, which he said was a “contractual obligation.
“The average pensioner doesn’t make that much money,” Follette added.
The man who heads up both the Arizona Police Association and the Phoenix Law Enforcement Association, Levi Bolton, said some police organizations, initially on board with the PFFA plan, have pulled their support over concerns that it will not stand up to a legal challenge.
“Pensions are not like other things,” he said. “They were protected by design in the constitution.”
“We would support moving forward and doing something with our system,” Bolton said, but “we had concerns, and we had not yet had anyone present us with anything that would abate those … if we went through with Mr. Jeffries’ plan.”
Bolton noted that discussions with legislators had confirmed their belief that changing the conditions that current employees and retirees had been guaranteed will not work.
“We believe that, if we put something in statute, and it does not pass constitutional muster, we will be right back where we were … and the fund will be less healthy,” he said.
One possible solution would involve leaving the situation as it exists for current employees and retirees, he said, but make the changes for new hires.
“Budgets were being trimmed, we were not hiring police officers and firefighters (and) that in and of itself was part of the problem,” but now that hiring has begun to resume, he said, it might work.
The executive director of the Arizona Conference of Police and Sheriffs, Jim Parks, said he hasn’t heard Jeffries’ presentation yet, but will within a “week or two.”
Parks said, “We need some kind of plan.”
In the meantime, the City of Prescott is looking to a ballot measure to offset the costs it faces by raising the sales tax: a 0.55-percent sales tax increase, with the revenue restricted to payment of the city’s unfunded pension obligations to the Public Safety Personnel Retirement System (PSPRS). The tax would end no later than Dec. 31, 2035.
The measure will be on the Aug. 25 primary ballot.