The Associated Press
PHOENIX — A proposal overhauling the state’s badly underfunded public safety worker pension plan ran into a buzz saw of criticism from a top Republican member during an Arizona House committee meeting Wednesday, but the plan was still approved.
The House Insurance Committee meeting highlighted Majority Whip David Livingston’s concerns that the overhaul fails to substantially change the ongoing problems with the plan. Livingston repeatedly questioned how a proposal that returns the plan to fully funded status in 19 years, about where the current fund plan projects, is better than doing nothing. Livingston is the House’s third-ranking Republican.
“I am concerned and (Appropriations chair Justin) Olson and a number of members are concerned that if we are going to go through this process of analyzing these bills and making a dramatic change, will it fix anything?” Livingston said. “Is it going to be a big enough difference?”
Livingston questioned the math used to come up with projected savings in the plan, noting that doing nothing still leaves it fully funded in 20 years, albeit with soaring contribution rates by employers. “The members need to understand that in 20 years these plans will be fully funded — if nothing is done,” Livingston told police andfirefighter union leaders in the audience.
Cities are facing massive increases in the amount they must contribute to employee pensions, the major reason the proposal was made.
Livingston’s sharp questioning of backers of the legislation brought pushback from Rep. Bob Robson, R-Chandler, who also is in House leadership. “I don’t know how those cities can handle that — It’s incumbent on us to move forward,” Robson said.
The three bills making up the package were approved by the committee on 7-1 votes. Backers hope they can pass the House this week so a portion requiring voter approval can make the May 17 special election ballot. They unanimously passed the Senate last week, but Livingston said that won’t happen in the House.
“This plan is not good enough to go through 90-0, whatever it happens to be,” he said. “There need to be a few people out there that will get bloodied and take some risks and ask the tough questions — and I sacrifice to do that today for the betterment of this House.”
A major component of the plan changes how yearly cost-of-living increases are calculated. Besides changes to cost-of-living adjustments, major provisions include a new tier for newly hired police and firefighters that limits maximum pension payments and requires employers and employees to share equally in payments to retirement accounts. New hires also would be given a choice of opting for a 401(k)-style retirement plan rather than a plan with a guaranteed pension.
Current employees pay about 11 percent of their pay into the retirement plan, but employer contributions aren’t capped.
The system’s current 49 percent funding status has led to massive increases in employer contributions, crimping budgets for cities and towns as their average retiree contributions near 50 percent of salary. Some are higher.
The Public Safety Personnel Retirement System plan has $6.2 billion in assets but $12.7 billion in liabilities.
Peoria Republican Sen. Debbie Lesko negotiated the deal with public safety unions and employers. Previous efforts to overhaul the system have been blocked by the courts because they changed benefits promised to current employees.
“Believe me, I think this is the best deal we could get. Is it the deal I would want if I were queen for a day and could get everything I want? No,” Lesko told the committee. “Please, please, help me get this passed.”