A special election in March will decide if changes are made to Phoenix’s unbalanced pension system, which could save the city about $600 million over 25 years.
Marty Schultz, vice chair of the Pension Reform Task Force, presented information on Proposition 201 during the Ahwatukee Foothills Chamber of Commerce Public Policy meeting on Friday. Schultz said any changes to Phoenix’s pension plan for employees must be approved by voters. That is the reason for Prop. 201.
The city is asking voters to approve maintaining a defined benefit plan but increasing employee contributions to be split 50/50 with the city, increasing the rule of 80 to a rule of 87 and increase time of service requirements. The changes will not affect police, firefighters or elected officials who are on a separate pension plan.
If Prop. 201 passes it will be applied to all new employees hired after July 1. It will not affect current employees. Jeff Dewitt, chief financial officer for Phoenix, said the city sees a 20 to 40 percent turnover in employees every seven years so the city will likely see significant savings in about 10 years. Phoenix only applied the changes to new hires to avoid problems that the state faced when it attempted to make changes to its pension system, Dewitt said.
The city currently contributes more than 20 percent to the pension plan while employee contribution is capped at 5 percent. The city has more than 14,000 employees, over 8,000 of them are on the current pension system.
While some experts argue the city’s changes to the pension system are only a Band-Aid for a larger problem, Schultz, who worked for 30 years for Pinnacle West/APS and started a law firm upon retirement, said in his opinion the changes are fair and the best option to keep the best and brightest employees at the city of Phoenix.
The city hosted 13 public meetings previously to discuss the options for pension reform. In the end, the City Council voted unanimously to put this option to voters.
Proposition 202 will also be on the ballot. Prop. 202 would amend the city charter to put in place a prudent investor rule for the Retirement Board and would add language confirming that the Retirement Plan is a tax-exempt government retirement plan. Prop. 202 would also allow the city to contribute more than its annual required contribution to the Retirement Plan.
Proposition 300 would change some language in the city charter to allow contracted security on public transit, like the Light Rail, to issue tickets for violations. Currently, only Phoenix police officers can issue citations.
The last day to register to vote in the special election is Monday, Feb. 11. The election will take place March 12. A sample ballot will be mailed to residents on Feb. 4, while actual early ballots will be sent out Feb. 14. For more information, visit phoenix.gov/elections or call (602) 261-8683.
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