The Arizona Public Safety Personnel Retirement System is broken and the cities are bearing the brunt of the failure.
The PSPRS provides pensions to police officers and firefighters and was once thought to be the Cadillac of state run pension plans in the United States. Today, it’s more like a 35-year-old Yugo sitting on a West Main Street used car lot.
There’s plenty of blame to go around for the demise of the plan.
Suspicious management and greed from police and fire unions are two points of blame.
The biggest chunk of it belongs to the failed oversight by ignorant state legislators who didn’t pay attention to what was happening at the PSPRS and changed the law repeatedly and gave unions what they wanted in increased benefits in order to get coveted endorsements at election time.
One law they changed allowed for the horribly flawed Deferred Retirement Option Plan known as DROP. DROP allows firefighters and police officers to retire, keep working, bank their pension money with interest guaranteed by the state for five years while they and their employer quit contributing to the pension plan.
It wasn’t the firefighters and police officers that faithfully paid into the system and were lucky enough to make it to retirement age that broke the system.
It took over 30 years to break the PSPRS and a year to come up with the ill-fated Proposition 124 to fix it. Between the fire and police unions with the backing of a Texas millionaire, Prop. 124 promised plenty while keeping the money sucking DROP program in place and taking away benefits from widows, orphans, the elderly and disabled. Multi-hundred thousand-dollar payouts for DROP are communal too.
Also, what Prop. 124 didn’t fix is the exploding contribution rate for the employers of firefighters and police officers.
The Associated Press is reporting House Speaker J.D. Mesnard has assembled a committee to examine the skyrocketing costs. In Bisbee, the city pays 133 percent of an officer’s salary into the pension plan. Prescott owes the plan $80 million and the city is looking at a tax increase just to pay for PSPRS pension costs. Bankruptcy has already been talked about in Prescott. (http://tucson.com/news/arizona_news/high-police-and-fire-pension-rates-send-arizona-lawmakers-scrambling/article_6db9903f-a7c9-5227-bc51-f969b7e9fbc5.html?id=201408&utm_source=facebook&utm_medium=social&utm_campaign=share)
The East Valley is a little better and some cities obviously run a tighter financial ship than others.
It should come as no surprise that Gilbert has the lowest costs while Tempe takes first place in PSPRS debt and employer contributions.
Gilbert’s contribution rate for police and fire averages 28 percent. Gilbert owes the PSPRS $60,783,738, or about $256 per resident.
Chandler’s combined contribution rate is 40.14 percent. The total debt is $159,868,498, or $645.99 per resident.
Mesa’s combined rate is 52.79 percent. The debt is $505,452,067 and the average per resident is $1040.90.
Tempe’s combined rate is 60.13 percent. The total owed to the PSPRS is $357,101,407 and cost per resident is $1,956.74.
At the end of the day the cost of public safety continues to climb and the current patchwork and piecemeal efforts to control costs and alter the current, and very expensive models for police and fire, have failed to solve the growing costs to provide fire and police services in the East Valley.
Let’s hope Speaker Mesnard can fix what his predecessors in the State Legislature broke before it’s too late.
I won’t hold my breath.
– Bill Richardson is a retired Mesa police detective.