Mayors, lawmakers want major fixes to fragile pension for police, fire


Arizona’s public-safety pension system faces financial peril because of poor investments and generous retirement benefits. (Wochit)

Editor’s note: An earlier version of this story contained inaccurate information provided by the Public Safety Personnel Retirement System about its most recent fiscal year’s rate of return.

Mayors and lawmakers stung by rising pension costs for police officers and firefighters are calling for more changes to the financially troubled Public Safety Personnel Retirement System.

Their calls come just one year after voters approved the latest reforms.

Prescott Mayor Harry Oberg will host his third PSPRS Mayoral Summit on Friday. He and at least 18 other mayors have publicly called on Gov. Doug Ducey to use his political muscle to help fix a battered pension system they say is putting a few cities on the verge of bankruptcy because of high government contributions needed to bail out PSPRS.

The Governor’s Office, following questions from The Arizona Republic, said it planned to send a representative to Oberg’s summit, which will be in neighboring Prescott Valley.

“The governor agrees this is an area in need of reform. Our public-safety officials have dedicated their lives to protecting us, and we owe it to them to ensure this system is well administered and sustainable,” Ducey spokesman Patrick Ptak said.

Bisbee Mayor David Smith, who also signed the mayors’ letter, said his southern Arizona town is being crippled by its payments to PSPRS, noting that 22 percent of the town’s budget goes to cover public-safety retirement costs.

“People don’t get the big picture, thinking, ‘It doesn’t affect me.’ But if Bisbee, Arizona, has to file Chapter 9 (bankruptcy), and we owe $17 million in unfunded liabilities, that money isn’t going away by our bankruptcy. It will be divided up (and paid) by other cities,” Smith said.

The PSPRS trust has about half of the money it needs to pay all current and future pension obligations to its members. Trust officials have blamed collapses in the stock market in 2001 and 2008 as the major reasons for under-funding. A measure voters passed last year made modest changes that are not expected to provide significant savings for a generation.

Lawmakers in 2011 also tried to make significant changes to PSPRS by suspending cost-of-living raises for retirees and forcing public-safety personnel to pay more for their pensions. However, many of those reforms were thrown out in court battles, and many PSPRS employees now pay less for their benefits than previously.

While mayors are expressing concern to the governor, state Rep. Noel Campbell, R-Prescott, is barnstorming the state with other lawmakers and holding public hearings regarding the financial state of PSPRS.

Campbell hopes to convince his colleagues and Ducey to radically change the trust. His third hearing is scheduled for 5 p.m. July 26 at the Yavapai College Auditorium. Others are scheduled later this year in Yuma, Miami-Globe and Phoenix.

A call to move the fund to the state treasurer


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