City Council members weighing in on pension reform act

PHOENIX — More Phoenix City Council members are weighing in on a pension reform initiative that aims to stop pension spiking, stop dual retirement benefits and eventually phase out pensions for civilian city employees in favor of 401(k)-style retirement programs.

The council heard a presentation by city-commissioned panel charged with analyzing the Phoenix Pension Reform Act to report on its actual savings value on Tuesday.
The findings presented to the council were not positive, with the panel deciding that the act did not meet any of the five criterion they would use to recommend the measure.

The panel claimed the initiative would end up costing the city more in the long run, it could not be considered a “best practice,” it would not help to attract or retain employees, it carries the potential of costly legal challenges, and is questionable in its effort to improve funding positions.

For more than an hour and a half, members of the council asked questions and attempted to clarify the findings, which Vice Mayor Jim Waring said he took issue with.
He said the report did not factor in savings that would be incurred from the city only paying employees one retirement package, not two. An issue Phoenix Pension Reform Act supporters, such as Waring, said the initiative would fix and thereby save the city hundreds of millions of dollars.

“I was surprised that they left out a very expensive item that sort of skewed the analysis,” he said. “I understand their reasons, but I don’t think it was a decision that they should have been making — certainly the numbers should have been provided to us.”

Councilman Sal DiCiccio also took issue with the findings and called into question the objectivity of a panel made up of nine people, all of which but one, receive pensions from the city of Phoenix and have a stake in the issue they’re reviewing.

Other councilmembers such as Kate Gallego expressed reservation over the Phoenix Pension Reform Act, especially the possibility of it end up in costly legal battles.

“I do have concern with conflicts with state statutes, I’m afraid it’s going to be full employment for attorneys as we litigate it for years,” Gallego said. “It has significant concerns in my mind.”

The council also heard public comment on the issue, which saw opponents and supporters of the initiative taking time to express their views.

The Phoenix Pension Reform Act was submitted to the city of Phoenix in March with more about 54,000 signatures of support, according to supporter Scot Mussi, chairman of Citizens for Phoenix Pension Reform.

The initiative would require current employees to make a choice between receiving a 401(k)-style deferred payment at retirement or receiving a pension, Mussi said they would no longer be allow to collect both. It would also phase out pensions for new employees, who would only be offered a deferred payment system going forward.

Finally, Mussi said the initiative would end pension spiking by no longer allowing employees to rollover unused vacation and sick pay to inflate their pensionable pay.

Voters will decide on the act on Nov. 4.