Prescott Gets Pension Costs For Hotshot Rulings

http://dcourier.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=143783

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.

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Prescott Unfunded Pension Liability Surpasses $70M

http://www.prescottenews.com/news/current-news/item/24931-prescott-unfunded-pension-liability-surpasses-70m

The new actuarial reports are out, and they show a bunch of red ink for local communities.

February 2, 2015 – Lynne LaMaster

It’s no secret that the Public Safety Personnel Retirement System (PSPRS) pension has a serious financial issue. As of the end of 2013, PSPRS claimed a Net Unfunded Accrued Liability of $4,654,534,525.

The City of Prescott has $70 million in PSPRS unfunded liabilties.

See: Arizona Public Safety Personnel Retirement System Annual Actuarial Valuation

By the end of October, 2014, in an Arizona Republic article titled, “More financial trouble for public safety pension plan” by Craig Harris, they used a figure of $7.78 B for the unfunded liability, stating, “The state pension system for police officers and firefighters has less than half of the money it needs to fund current and future retirement payments…”

Whatever figure you choose to believe, in the most recent computations, $70M of that unfunded liability belongs to the City of Prescott.

See: PSPRS 2014 Actualrial Reports, Prescott Police Department

PSPRS 2014 Actualrial Reports, Prescott Fire Department

Add that all up, divide by Prescott’s population, and that’s a whopping bill of $1,735.43 for each person – man, woman and child – residing in the city limits.

Prescott’s not the only city with a gigantic unfunded liability – Flagstaff totes a $78.7M bill, Phoenix has a (gulp) $2B ledger of unfunded liabilities for their police and fire pensions.

Prescott Valley, on the other hand, has a much more modest amount of $6,592,682 of unfunded liabilities for their police department. Of course, PV doesn’t have it’s own fire department, they rely on Central Yavapai for fire service. And yes, there’s some $21M in unfunded liabilities at CYFD, too.

Today, the Prescott City Council will start their 2016 budget discussions, which will surely be affected by these numbers. Stay tuned as we continue to cover this issue in the days and weeks to come. How did this happen? More importantly, what can be done about it?

In the meantime, just remember the figure of $70M in the red.

One more thing: The local PSPRS board decisions to give retirement benefits to three of the Granite Mountain Hotshot widows has not been calculated in yet. So, that isn’t reflected in the $70 M figure. However, once it is figured in, the amount can be expected to rise.

Cottonwood Public Safety Pensions Balloon Another $9 Million

http://verdenews.com/main.asp?SectionID=1&SubSectionID=1&ArticleID=65393

Arizona cities, towns face public safety pension crisis
Cottonwood’s balance sheet shows $9 million debt

Jon Hutchinson Staff Reporter

COTTONWOOD — Cities and towns all over Arizona are shuddering at the thought of paying down the unfunded liabilities of the Public Service Personnel Retirement system.

Cottonwood, for one, has a $9 million debt that has come to roost.

The state pension system for police officers and firefighters has less than half of the money it needs to fund current and future retirement payments, an amount equal to $7.78 billion.

Cities and towns around the state face extra-large pension bills from the Arizona Public Safety Personnel Retirement System because of a state Supreme Court decision that shot down a law that cut costs for the system. The highest court ruled unconstitutional Permanent Benefit Increase (PBI) changes made by Senate Bill 1609 in 2011.

That was the Fields Case, explained Rudy Rodriguez, Cottonwood’s Administrative Services General Manager. Now, Rodriguez would like to divert funds from every budget source possible to help plug Cottonwood’s debt sooner than later to avoid accumulated interest.

The average lifetime annual pension for a public-safety retiree is $53,236, nearly three times what an average retiree receives in the more financially-stable Arizona State Retirement System for teachers and government workers, according to an Arizona Republic finding.

Rodriguez says the unfunded amount for the Cottonwood Fire Department amounts to nearly $1.5 million, but the unfunded liability for the Cottonwood Police Department is $7.59 million. The unfunded amounts could be paid off over 22 years in exchange for a 7.85-percent interest rate, pushing Cottonwood’s $9 million debt to $21 million.

The City of Prescott, by comparison, is one of the Arizona cities considering raising taxes to pay down its debt.

Arizona is not the only state facing a pension crisis. Time Magazine has called it a “Pension Time Bomb in America.”

Illinois is facing bankruptcy. One columnist says California is facing Death by Pension, in a periodical called PensionTsunami.

AZ Cities Want Trustees Replaced

http://www.azcentral.com/story/news/arizona/politics/2015/05/27/public-safety-pension-proposal/28046353/

91 Arizona cities publicly expressed that they want the Arizona Public Safety Personnel Retirement System’s seven member Board of Trustees replaced due to lack of expertise and lack of fiduciary action.  In sum, they are political hacks willing to do anything to save their own skin.

STORY HIGHLIGHTS

  • League of Arizona Cities and Towns call for the closure of the public safety pension
  • The league also wants to replace the seven-member Public Safety Personnel Retirement System board
  • League’s plan would only influence employees hired after July 1, 2016.
  • The Legislature would have to make any changes to PSPRS.

The League of Arizona Cities and Towns is calling for major changes to the financially troubled retirement system for first responders because its members have been hard hit by rising public-safety pension costs.

The 91-member league wants a new statewide retirement system for employees hired after July 1, 2016. It wouldn’t change the pension plan for current members and retirees.

The league also wants to replace the seven-member Public Safety Personnel Retirement System board, which has only three private-sector members, with an independent body of “qualified experts with fiduciary responsibility.

Fiduciary-

A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (person or group of persons). Typically, a fiduciary prudently takes care of money for another person.

PENSIONERS FIRST LINK:  The Public Safety Pension Board Should Be Fired

The Arizona PSPRS Board of Trustees

-Brian Tobin, Chairman                                                 

-Greg Ferguson, Vice Chairman

-Randie A. Stein

-Richard J Petrenka

-Lauren Kingry

-Jeff Allen McHenry

-William C Davis

The league’s plan has been in the works since June 2014. It was presented Wednesday before the PSPRS board, with one member expressing skepticism. The board took no formal action.

The proposal comes amid another reform effort pushed by the Professional Firefighters of Arizona and a work group at the Capitol.

RELATED: Legal bills go unabated at public-safety pension fund

MORE: Complete coverage of public pensions

Most of those involved have publicly acknowledged the current system is financially broken and needs an overhaul as cities and towns have been forced to cut services and put a freeze on hiring police and firefighters because of increased public-safety pension costs. Teachers and other public employees are part of the Arizona State Retirement System and not covered by this proposal.

Costs have increased because of generous benefits for retirees, years of poor investment returns and an Arizona Supreme Court decision that rolled back cost-saving reforms.

The Legislature would need to make any significant changes to the public safety pension system.

The league’s plan would:

Create a different pension system for new employees hired after July 1, 2016.

Have employers and employees pay the same amount of money or contribution rate into the trust. Currently, employers pay four to eight times the contribution rate of employees.

Pool assets and liabilities to spread the risks among all government bodies.

Have a pension board of trustees who are independent, qualified experts. The current board has four public employees with three — a firefighter, police officer and county supervisor — who benefit from the system.

“We have to change the system, and the way it’s designed,” said Scott McCarty, Queen Creek’s finance director and league pension-task-force chairman.

McCarty said the league wants to make changes for future employees to avoid court challenges. Arizona courts and those across the country have struck down numerous pension-reform laws that have reduced benefits for retirees or changed the system for current employees.

Greg Ferguson, PSPRS Vice Chairman and a Yuma County supervisor, told McCarty that the league’s pooled-asset plan amounted to a cost shift for some governments that would have to pay more to offset the burden of other communities that have high contribution rates. Ferguson also said the current system would suffer even more if new members were not allowed to join.

This is exactly why the current Board of Trustees needs to go!

                                                   – Pensioners First

McCarty, later in an interview, complained that it was unfair to ask new employees to continue to prop up an ailing system, calling it a “death spiral.”

Sen. Debbie Lesko, R-Peoria, has been running a pension-reform work session at the Capitol since February. Lesko, in a phone interview, said she hoped to have a plan in place for the 2016 Legislature to consider in January.

Lesko said the league is a major player in discussions because its members employ thousands of police officers and firefighters and are major financial contributors to PSPRS.

Lesko said the league’s plan and the firefighters’ proposal, which would change the funding mechanism for pension increases, have good points and that she’s not ruling anything out.

“We are close to a breaking point and everyone realizes we need to do something,” Lesko said. “I’m excited we have all been in the same room talking about this. We may get something done.”

Brian Tobin, PSPRS chairman and a Phoenix deputy fire chief, said he’s attended Lesko’s meetings, and he believes they have been productive.

“It’s a healthy, collaborative effort to determine a reasonable solution to pension reform,” Tobin said.

The Arizona Republic in 2010 published a weeklong series detailing the burdens that state governments faced because of generous pension benefits and rising costs.

The Legislature responded in 2011 by passing cost-saving reforms, but the state Supreme Court in 2014 restored cost-of-living raises to PSPRS retirees, costing the system hundreds of millions of dollars.

Since 2011, the health of the PSPRS has deteriorated, and the funded ratio — the percentage of pension-fund liabilities that could be paid with current assets — has dropped from nearly 62 percent to about 50 percent.

As funded ratios drop, more money is needed from taxpayers to shore up the nearly $8.3 billion trust.

Desert Troon Caught Unaware On Marana Real Estate Investment

http://tucsonlocalmedia.com/marana/article_cfdb35fe-f35f-11e4-af2c-d758ec32082d.html

When you’re in Phoenix things get dropped between the cracks

See original article written by Marana News May 6, 2015

Story Highlights

  • Attorney admits Desert Troon was completely unaware of changes affecting its Marana real estate investment
  • The proposed changes were discussed in a council study session and were brought before the Marana Planning Commission
  • Developer threatens a lawsuit
  • One of the largest anchor tenants, Wal-Mart, threatens to pull out of proposed development
  • “We’ve been talking about if for a long time,” said Mayor Ed Honea. “It was posted on our website for our Planning Commission for all the world to see.”
  • “When you’re in Phoenix things get dropped between the cracks,” noted Councilman Herb Kai
  • Council Member Roxanne Ziegler voiced her displeasure with the developer’s lawyer

When a council holds a public hearing about a tax increase and a proposal to make a roadway safer, the tax increase usually attracts more residents who speak out against it. That was not the case last week during a Marana Town Council special session.

Besides a sales tax increase, the council also discussed changes to the Marana General Plan that drew criticism over a plan that would establish Tangerine Road as a primary connection to the Marana Road interchange.

The council voted 7-0 to approve a temporary half-cent sales tax to fund the construction of the new police station. The tax will conclude as soon as the funding for the construction is done. The estimates are 3-4 years.

“I am thrilled to death,” said Mayor Ed Honea after the meeting. “One of the biggest assets we have in this community is our policing.”

The sales tax is expected to begin July 1.

The only person choosing to speak was Marana Chamber of Commerce President and CEO Ed

Stolmaker, who was reiterating his organization’s support for the plan. 

The town and council expected little, if any, opposition to the plan. Before presenting the plan, Marana Police Chief Terry Rozema was required to hold several informational meetings and open houses to discuss the need for the new police station. By the time the police department presented the idea to the council, it was fairly well known that the plan had the support of the public and local business leaders. 

Honea’s own research backed up those claims. 

“Everybody signed off,” said Honea. “Simon Mall, Home Depot, Lowes, Costco. They said ‘you bet, we love having the police.’”

With the passing of the sales tax increase, the town can also begin the process of selecting a construction project manager, which they would like to do before the end of July. 

The council passed a resolution to adopt minor amendments to the transportation element of the Marana General Plan. The resolution passed 6-1, but was not without controversy, mostly related to the portion of the plan that would establish Tangerine Farms Road as the primary connection to the Marana Road interchange.

Lawyers representing the Uptown at Marana Project and the Marana Mercantile Project, owned by the Cardon Group and Desert Troon respectively, asked the council for a continuance before voting on the plan. The two developers have worked with the town on a 117-acre development on Marana Road, west of I-10.

Although the development would still be visible from Interstate 10, the developer is not happy that there would not be direct access from the freeway and felt that the changes threatened the feasibility of the project.

The Phoenix-based developers claimed they were unaware that the proposal, which was first discussed with them in 2013, was being considered at the time. The proposed changes were discussed in a council study session and were brought before the Marana Planning Commission, and were also discussed during presentations about the Marana Main Street.

“Our clients were completely unaware that the process had taken place and never had an opportunity to weigh in on this proposal,” said Adam Trenk of the Rose Law Group.

Trenk said that the projects were in jeopardy because the traffic to support those projects may not longer be there because traffic off of I-10 would be diverted down Tangerine Farms Road and not Marana Road. 

Trenk submitted a letter from Wal-Mart that said they would not be interested in the location because of the proposed changes. Trenk also reminded the council that there were agreements for the developers to pay for infrastructure improvements, but those agreements would become void if the roadway was changed. 

Council Member Roxanne Ziegler voiced her displeasure with Trenk.

“When you threaten us in your letters with a lawsuit, it tends to come off a little disingenuous,” she said. “What I am trying to say is your client is not going to suffer. That is a huge area that is going to grow and other things are going to go in there.”

After the meeting Honea noted that the Wal-Mart on Cortaro does not have direct freeway access and to enter the shopping center shoppers either need to go up half a mile and turn left at the light, or turn left across traffic, yet the store is the second-busiest Wal-Mart in the state. 

“If someone sees a Wal-Mart and wants to get to it, it’s not going to worry them to go down a quarter mile and make a right turn,” noted Honea.

Marana resident Sharise Steffens said that she was unaware of the proposed changes and questioned the transparency of the council, but admitted she was unaware of the past council meetings or the planning commission meeting. 

“We’ve been talking about if for a long time,” said Honea. “It was posted on our website for our Planning Commission for all the world to see and all the development people we deal with keep an eye on that thing to see what is going on. No one was trying to sneak anything.”

Councilman Herb Kai was the lone dissenting vote, questioning whether the town made the correct efforts to contact all affected parties. Although he did not believe the town did anything improper, he did think maybe direct contact with the Phoenix-based developers would have been a good idea

“When you’re in Phoenix things get dropped between the cracks,” noted Kai. “I think the town should reach out and say ‘we’re restarting this thing over again and you guys should come down and talk to us.’”

Kai said he voted against it because he wanted to explore options with all the parties involved, not because he had issues with the plan itself. 

Two others, a representative of a different development group and a local business owner, both spoke out in favor of the plan. Mitch Stallard represented Desert Heritage Partners, who also own land in the area, while Kent Crotts is a business owner on Sandario Road who feels the plan helps keep Sandario a viable business center and better connects it to other roadways where development will spring up.

For Honea, the changes were not only good for local businesses, but also a matter of safety. The Marana Interchange, as it is currently aligned, sees freeway access convene in a confusing manner with Sandario, the frontage road and Marana Road. 

“The biggest issue we have is that Marana Road is a deathtrap,” she said. “Marana Road, Sandario Road, the freeway and tons of traffic coming out of the valley and everything else, we had to make a change.”

The plan will also make changes in the right of way distance on Tangerine, remove plans for the Tangerine interchange to be moved and adjust right of way distances in areas deemed environmentally sensitive, mostly in the Tortolita fan.

91 Arizona Cities Call For The Closure Of The PSPRS Public Safety Pension

http://kjzz.org/content/141281/arizona-cities-call-overhaul-pension-system

Arizona’s public safety pension system has been racked by crises

May 18, 2015  KJZZ

Public Safety Pension Reform Task Force

Public Safety Pension Reform Task Force

Story Highlights

  • Arizona’s cities and towns are calling for a major overhaul of public safety pension
  • The League of Arizona Cities and Towns is putting forward a handful of suggestions, including to end the current system
  • Bryan Jeffries, head of the Professional Fire Fighters of Arizona union, fights the changes

Arizona’s cities and towns are calling for a major overhaul of how the state funds its pension system for firefighters and policemen, but labor groups are questioning some aspects of the proposal.

Arizona’s public safety pension system has been racked by economic crises, like the tech bubble and the Great Recession. Costs have grown enormously in recent years with many cities now carrying millions in unfunded liabilities.

To get back on track, the League of Arizona Cities and Towns is putting forward a handful of suggestions: end the current system and start a new one for future employees; pool all the assets and liabilities together, rather than divide them among each employer;  “and that the cost sharing between the employers and employee is on an equal 50/50 basis” said Ken Strobeck, executive director of the league.

“That’s not the way the system is structured today,” said Strobeck. “Today, the employee contribution is capped.”

This means most increases are passed onto the employer.

But Bryan Jeffries, head of the Professional Fire Fighters of Arizona, sees it differently.

“They never talked about sharing equally when the firefighters and paramedics were paying our full share and they were paying zero,” he said. “Now that their amount has gone up, they want equal sharing.”

Jeffries said his union has drafted legislation that would keep his members contributing about 11 percent and eventually bring down employer contributions. Some cities are currently paying more than 50 percent. The two groups do agree on some reforms, though, including the need to curtail cost of living increases and build up reserves.

Phoenix’s Public Safety Pension Costs Rising $40 Million

http://www.azcentral.com/story/news/local/phoenix/2015/05/20/phoenix-council-oks-budget-delays-paying-pension-costs/27631065/

I’ll gladly pay you Tuesday for a hamburger today!

Delayed Pension Payments

Delayed Pension Payments

Story Highlights

  • Phoenix leaders say its budget is balanced but city has delayed paying pension costs to avoid deficit
  • City Manager Zuercher recommended phasing in higher pension cost for police and fire over three years
  • Budget includes money for hiring more police and increasing officer training
  • The city’s payments to the system are increasing by $40 million

Phoenix leaders voted 6-3 Tuesday to approve a final budget for the next fiscal year, but City Council members were sharply divided over whether the city truly balanced its books.

On paper, the spending plan backed by Mayor Greg Stanton and the council’s liberal and more centrist members is balanced. The city projects collecting enough revenue to cover its expenses without raising taxes or making any cuts to public programs in the next year.

While supporters of the budget have praised Phoenix’s return to black ink, their message clashed with critics who said that the city only avoided making cuts because it irresponsibly delayed paying its full retirement costs.

The city delayed paying money it owes to the state pension system for police officers and firefighters. Because of an Arizona Supreme Court decision that struck down part of a state law meant to reduce pension costs, the city’s payments to the system are increasing by $40 million.

PREVIOUSLY: Phoenix budget sidesteps soaring pension costs

However, City Manager Ed Zuercher recommended that the city phase in those high payments over three years — a move that increases its long-term pension costs by about $69 million over 22 years.

Council members ultimately approved Zuercher’s $1.16 billion general-fund budget for the 2015-16 fiscal year; Phoenix operates on a July 1-June 30 fiscal calendar. The general fund pays for everyday expenses, such as police, fire and parks.

Stanton and council members who supported the budget have said it makes sense to defer paying some pension costs because absorbing the full amount today could require drastic cuts to popular city services. The city would face a roughly $30 million deficit if it paid its full pension tab to the state next year, officials said.

RELATED: Phoenix budget balanced for one year, then red ink

“We’re here to provide those services,” Councilwoman Thelda Williams, a moderate Republican, told The Arizona Republic after she voted for the budget. “In the meantime, the economy could turn around, circumstances could change and next year, we might not even have a problem.”

The council’s more fiscally conservative members, Councilmen Bill Gates, Sal DiCiccio and Jim Waring, voted against the budget. DiCiccio and Waring said the city should address its fiscal problems head on and not create higher costs for taxpayers in the long run.

“The budget just literally puts the city of Phoenix further in debt,” DiCiccio said. “It’s like using a credit card to pay off your mortgage. You’re using debt to pay off debt.”

Even without an unexpected jump in pension costs, the city originally projected a deficit next year, and funding cuts at the state level added to the problem.

Phoenix ended up in the black because it has created a new water-bill tax for residents, cut employee compensation, eliminated 162 vacant city jobs and delayed replacing some old city vehicles and equipment.

Still, city leaders increased spending in a few areas, including $2.2 million that will pay overtime and other costs for 40 hours of additional training for all city police officers.

The city will also accelerate the hiring of police in the next year, bringing on 110 new officers. Zuercher projects that’s enough to offset personnel the department will lose through attrition. A hiring freeze shrunk the force by nearly 600 officers in recent years.

Phoenix can hire more officers now because its special public-safety funds, which are supported by a voter-approved tax, are rebounding after running sizable deficits during the recession. Those funds are separate from the city’s general fund.

Although the city has avoided a deficit next year, it’s far from resolving its long-term red ink. Phoenix faces the prospect of deficits for several years, starting with an estimated $31 million to $58 million deficit in fiscal 2016-17.

Zuercher has said the city will spend the next year finding new ways to save money and resolve a potential deficit.

So far, the city plans to increase how often it makes pension payments to the state, which could save about $20 million over 22 years because the money would be invested for longer and potentially provide larger investment returns, city officials said.

Scottsdale Taxpayers to Pay $3.1 Million More For Police Pensions, Plus $1.4 Million For Healthcare

http://www.azcentral.com/story/news/local/scottsdale/2015/05/06/scottsdale-pensions-health-care-costs-expected-to-rise-more-than-5m/26869799/

Scottsdale pensions, health-care costs expected to rise more than $5 million

May 5, 2015  Arizona Republic

Story Highlights

  • Scottsdale’s costs for employee health-care coverage and pensions are rising by millions of dollars next fiscal year.
  • The council is working on its budget for fiscal 2015-16, which takes effect July 1.
  • To offset the increases in health-care, pensions and other areas, the city expects to bring in more revenues.

Arizona Pensions

Arizona Pensions

Scottsdale’s costs for employee health care and pensions are expected to rise by more than $5 million in the coming budget.

The city — and taxpayers — will pay an estimated $3.1 million more toward employee pensions in the Scottsdale Police Department, budget projections show. The spike is partially the result of an Arizona Supreme Court decision that struck down parts of a 2011 state law as unconstitutional.

In addition, the city is facing a $1.4 million jump in health-care costs for employees, according to budget officials.

The projections are included in the city’s proposed budget, which covers the fiscal year starting July 1.

MORE:Phoenix, other Valley cities, reel from pension spikes

“Health care is a continuing issue for us, even after as many efforts as we have taken to keep everything in check,” Mayor Jim Lane said.

Lane noted that the rising public-safety-pension and health-care costs are not under the city’s control. Cities across the Valley and beyond are facing similar situations as their pension and health-care bills continue to rise, requiring taxpayers to make up the difference, he said.

Scottsdale is projecting increases in revenue sources, such as sales taxes, that will help cover the higher costs.

For that reason and others, City Manager Fritz Behring said Scottsdale is “in pretty good shape” budget-wise. The economy has improved, “but the Council still has to be careful about how they spend each dollar,” he added.

Budget Director Judy Doyle said several factors are fueling the health-care increase, such as increased use of high-cost specialty drugs; fees and regulations from President Barack Obama’s health-care law; more smaller-cost claims; and ordinary medical and pharmacy price increases in the market.

Lane said $255,000 of the spike for health care is a result of requirements in Obama’s Affordable Care Act.

“It’s essentially a charge to cover those who are not insured,” he said.

Scottsdale and employees both contribute money toward pensions for police and fire employees in the Arizona Public Safety Personnel Retirement System.

Employee contribution rates are set by state statute. Employer contribution rates are set each year based on the employer group’s annual actuarial valuation, according to PSPRS.

The cost is not evenly split, with Scottsdale contributing a larger percentage based on the established rates, Lane noted.

Currently, the city contributes about 28.4 percent, compared with employees’ 11.05 percent.

Next fiscal year, Scottsdale will contribute 35.53 percent, vs. 11.65 percent for employees.

Police pension costs also will rise because of an increase in overtime and a Council-approved step pay program for police employees.

Scottsdale also expects to pay an additional $500,000 toward the retirements of employees in the Arizona State Retirement System, which covers most of the city’s remaining workforce.

The rates are actually decreasing for the Arizona State Retirement System, but the dollar impact will rise because of increased wages.

The figures were provided by the city’s budget director.

Tucson Police Union Wants More Benefits

http://tucson.com/news/local/tucson-police-union-asks-for-better-retirement-benefit/article_103d95a3-c6ff-52ee-8d6f-00d091f823d0.html

Tucson police union asks for better retirement benefit

May 5, 2015  Arizona Daily Star

The police labor union wants the city to upgrade retiree medical coverage, saying its benefit package comes up short of what firefighters get.

But the city says it can’t afford that right now, when it is already struggling to pay for the growing cost of the public safety pension.

The Tucson Police Officers Association (TPOA) wants the city to pay for medical insurance between when an officer retires and when they become Medicare eligible at 65.

The city did away with that benefit in 2010 to save money, but the Tucson Fire Department gained the benefit back a year later after contract negotiations.

Retired police officers deserve the same as retired firefighters, said Jason Winsky, government affairs director at TPOA.

TPOA filed a compensation dispute with the city last week as part of the city’s compensation planning process. The union is also in labor contract negotiations with the city.

“This is a gross disparity,” Winsky said. “It’s unacceptable that they fixed it for fire but not for police.”

City HR director Curry Hale met with TPOA, he told the City Council Tuesday during an update on the compensation planning process.

Councilmember Steve Kozachik said there are inconsistencies between various labor contracts, such as Tucson Fire and Tucson Police, because they’re negotiated independently.

The city can’t afford to do what TPOA is asking, he said.

“While we’re still pulling money from the reserve fund to balance the budget, we can’t afford raises and we can’t afford to cover these retiree health benefits,” Kozachik said.

The city recently had to find $18 million to cover the underfunded police and fire pension funds. It chose a three-year payment plan to ease the burden.

It would cost another $364,000 a year to cover the retiree health care, Kozachik said.

Winsky said the benefits are important because police and fire employees can’t work as long as other kinds of workers.

The benefit is a stopgap until they are eligible for another program.

City Attorney Mike Rankin said retiree health benefits are not within the scope of the compensation dispute process and should be discussed at the negotiating table.

The compensation plan will be approved next month.

But Mommy, that’s not fair!  I want one too! 

Squeazing Every Last Drop

http://www.azcentral.com/story/news/local/phoenix/2015/05/14/phoenix-firefighters-get-back-pay/27284081/

Phoenix firefighters to get $2.5 million in back pay

The Republic – May 13, 2015

Story Highlights

  • Nearly 200 firefighters will get $2.5 million in back pay
  • The city put some firefighters at incorrect salary levels during recession-era budget cuts
  • Payouts range from $249 to more than $19,400
  • The United Phoenix Firefighters Local 493 union began an investigation

Nearly 200 Phoenix firefighters will get $2.5 million in back wages to correct a payroll error that resulted in underpayment for as many as four years.

The Phoenix City Council voted unanimously Wednesday to spend the money, allowing the city to close the book on missteps that started in July 2010 during recession-era budget cuts. Human Resources Department employees had failed to adjust some employees’ salaries to match changes in the fire union’s contract, according to a city memo.

City leaders have widely panned the mistake, saying it should have been caught and corrected years earlier. One longtime councilwoman said she has never seen a personnel mix-up of this magnitude at City Hall.

Phoenix recently signed settlement agreements with the firefighters who were underpaid, allowing the city to avoid potentially costly litigation. Affected employees have received lump-sum checks, ranging from $249 to more than $19,400.

PREVIOUSLY: Phoenix underpaid 192 firefighters for up to 4 years

Fire union President Steve Beuerlein said while some of his members were frustrated by the delay and discussed filing lawsuits, the union convinced them to work with the city so the dispute could be resolved more quickly and without additional costs.

“It’s been over a year and a half that we’ve been working on this and we’re definitely relieved that it’s behind us,” he said. “That’s an understatement. They’ve assured us that they’ve taken the steps and they’re prepared to make sure it doesn’t happen again.”

The problem went unnoticed until two firefighters compared their paychecks in mid-2013, Beuerlein said. They noticed that one of the men was paid more even though they had been hired around the same time.

After that, leaders of the United Phoenix Firefighters Local 493 began an investigation. City officials initially told them there wasn’t a problem, but both sides soon realized widespread payroll errors had occurred, human-resource records show.

The firefighters filed a labor grievance last summer after the issue went unresolved for nearly a year. Beuerlein has said the firefighters could have sued for up to triple damages.

City officials said the mix-up happened when the city reduced the number of pay grades and changed the amount of time between raises for firefighters who were early in their careers. Because the changes weren’t implemented correctly, some employees were placed at a wrong salary level.

WHAT PHOENIX FIREFIGHTERS MAKE IN BASE SALARY

Like many government agencies or companies with unions, Phoenix has a “step-pay” system that allows nearly every employee to get a set raise every year. The salary ladder includes up to 10 steps, and employees generally start receiving a “longevity” bonus instead of a raise once they’ve reached the top step for their position.

Phoenix employees who are hired at the same time for the same position often earn the same salary for the bulk of their careers because of this pay system.

Councilman Jim Waring, who had been undecided on whether he would support the settlement, ultimately voted in favor. He said city officials haven’t given a clear enough explanation of how the problem occurred, but he doesn’t want to punish firefighters for a mistake that wasn’t theirs.

“We owe them the money, so that’s kind of a no-brainer,” Waring said. “It’s frustrating. No doubt about it.”

Acting Human Resources Director Cindy Bezaury, who came to Phoenix in late 2013, has said the error happened when the city was “trying to survive an economic disaster” and making all of its employee unions take cuts. The department has a new executive leadership team due largely to retirements.

“I can understand why it was missed at that particular point,” she said in March. “A great deal of change was taking place. They were trying to track and monitor that.”

Despite the scope of the settlement, it won’t have an impact on Phoenix’s budget because it’s being paid out of the city’s risk-management fund, a pool of money used to protect the city from lawsuits and claims, Bezaury said.

The $2.5 million expense is in addition to about $58,000 in settlements the city paid out in late 2014 and early 2015, making the firefighters whole since the start of the fiscal year on July 1. Phoenix put all of the firefighters on the correct pay steps last fall.

Bezaury said fixing the problem took so long because of the complicated payroll math that needed to be done for each employee. The city had to account for each employee’s overtime pay, pension payments and other factors.

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