City Councilman Sal DiCiccio says a committee built by the city to take a look at pension reform is not doing enough to protect taxpayers.
DiCiccio said he was the only city councilman not allowed to have a representative from his district voting on the pension reform committee within the city. Now that the committee has produced some unofficial recommendations, DiCiccio is acting fast to try and get more done.
According to a discussion document posted on the city's website, by July 1, 2012 the committee recommends new employees increase their contribution rate, vacation and sick pay cannot be used to boost pension calculations, retirement age would be moved from 60 to 63 with ten years of service, the Rule of 80 be changed to the Rule of 83, travel or technical allowances would not be included in Final Average Compensation for pensions, the 13th Check provision be repealed, time of service calculations reflect actual service time and the smoothing period for new employees would remain at four years.
DiCiccio would like to see capping for the amount of taxpayer liability, a minimum retirement age, better transfers and more incentive planning as the city moves to a defined contribution plan rather than the defined benefit plan. He says the committee's discussion documents so far show an unrealistic model and no protection for the taxpayers.
"There were two things that were completely unrealistic in their proposal," DiCiccio said. "They guaranteed government staff pay raises at 4.5 percent for the next 20 years as part of the model they put together. They're institutionalizing pay raises for every city employee for the next 20 years. The other thing they did was built in a growth rate of 8 percent which is unrealistic. It happened this year but it was because there was a major drop the year before. You have to look in larger terms. Their model justifies this program. When you put in the right numbers you can justify what you want."
DiCiccio has built his own recommendations with help from the Goldwater Institute and two taxpayers from the Ahwatukee Foothills area. His plan is to provide his recommendations to the committee in hopes of bigger reforms. The committee will meet at least once more on Nov. 17. If they ignore his plan, he'll take it to the council and the mayor, DiCiccio said.
"It's either going to be small reforms that came out of the committee and heavy reliance on the taxpayer, or maybe looking at a change with more protection for the taxpayer and their pocketbooks.," Diciccio said. "My biggest fear right now is I probably don't have more than two or three votes for those changes to occur."
The committee has been meeting since February and is expected to make official recommendations by the end of the year, said Rick Naimark, deputy city manager. Naimark said the city is also looking at employee benefits and both studies are expected to be combined before negotiations at the beginning of the year.
"It must be recognized that current Phoenix employees and retirees, for the most part, do not receive inappropriate benefits," the committee's discussion document says. "The average annual pension, as of June 30, 2011, is $28,042 and the average salary is $61,845."
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