Reports predict varied outcomes of city pension initiative - Ahwatukee Foothills News: News

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Reports predict varied outcomes of city pension initiative

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Posted: Tuesday, July 8, 2014 8:24 am

Several reports are being released about the Phoenix pension initiative appearing on November’s ballot, but none of them seem to agree on the cost or savings of the plan.

A report from the city’s actuary, Cheiron, says the initiative would cost taxpayers $358 million over 20 years while a report from the Reason Foundation says the plan would save the city $394.7 million over the next 25 years.

Those in favor of the initiative say the city’s analysis left out all possible savings while those opposed say the savings only comes after years of transition away from the city’s current plan.

“The $350 million is at least $350 million,” said Councilman Daniel Valenzuela. “Some of the numbers presented last year… were as high as more than $600 million… Once we get past that initial cost, will there be a savings? The answer is yes. The question is how do we pay for that $350 million-plus to get there? Where does that money come from?”

That money comes from ending differed compensation and ending spiking, said Scot Mussi, executive director of the Arizona Free Enterprise Club.

“From our perspective, the analysis the city did is at best incomplete and in some respects misrepresentative of the initiative,” Mussi said. “They intentionally leave out significant portions of our initiative to make the costs seem higher than they appear. In fact, our committee did our own actuary analysis that showed it will save over $150 million in the first 10 years and close to $200 million in the first 15.”

According to city staff, ending differed compensation would require the city to reopen contracts already in place and renegotiate those details.

“Some people who are supporting this initiative say we’d save $470 million in the first year alone,” said City Councilwoman Kate Gallego. “That would come entirely from cutting employee compensation. We have entered into an agreement. It was a very difficult process … It would be false numbers to say we’d cut these employee’s compensation. We would be sued. There is a lot of precedent. We will lose. It is not fair to tell taxpayers they will save that money when they will not.”

The initiative would eliminate salary rules that can lead to pension spiking, provide an optional defined contribution plan for current employees and eliminate future city contributions to the current defined contribution plan because all employees in the city’s retirement system will have only one retirement plan moving forward. The initiative will not affect police and firefighters.

• Contact writer: (480) 898-7914 or

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