PHOENIX — Bryan Jeffries, the chief of Arizona’s firefighters’ association, has been arguing to anyone who will listen that his members — and the state’s police officers, too — should volunteer to cut their own pension benefits.
Jeffries, a fourth-generation Arizonan who has been a firefighter and a city councilor, says that emergency workers have a special obligation to protect the public not only from physical peril, but also from financial ruin. Cutting pensions for firefighters and police officers would help save their woefully underfunded retirement plan and bail out towns and cities that are struggling to keep up with their mandated contributions, he says.
“It is critical for our state, for the taxpayers and for the next generation that will be here long after we are gone, that we repair this,” said Jeffries, whose group, the Professional Fire Fighters of Arizona, works on political issues relevant to its membership. “I know intellectually that with these ballooning payments, I feel a direct conflict with the oath I took to protect the citizens.”
His unusual proposal has been a touchy subject for many of the people whose pensions would be cut, because defined benefit pension plans are viewed as compensation for doing dangerous work and a lure to recruit public servants. And despite the growing shortfall in the statewide pension plan that has put stress on cities and towns, which must make up the difference, politicians have been nevertheless wary of attacking these benefits, for fear of alienating two powerful constituencies and to sidestep questions about why they lavished such generous pensions on them in the first place.
“When you see policemen and firemen putting their lives on the line, you want to make sure that when they retire, they receive a reasonable retirement,” said Jeff Dial, a Republican state representative from the Phoenix area who supports the firefighters’ initiative.
But among the 236 employers in Arizona’s $6.1 billion Public Safety Personnel Retirement System, which covers about 31,000 active and retired emergency workers, 39 have fully funded pension plans. An additional 21 plans are less than 40 percent funded, a rate so low that if they operated in the private sector, they would be at risk of being taken over.
The unfunded liabilities have forced cities and towns to pick up the tab. Tucson, for instance, contributes the equivalent of 51 percent of its emergency workers’ payroll, up from about 11 percent a decade ago.
The Arizona pension system has been eroded by ill-fated investments, provisions that have steered money to retirees instead of replenishing the plan, and budget woes that have led cities to cut the size of their fire and police departments, leaving fewer employees to pay for retirees. Municipalities forced to pay higher contributions have had to raise taxes and take other difficult steps.
“The costs of the plan put additional pressure on budgets, especially when we’re still trying to recover from the recession,” said Rene Guillen Jr., a legislative director at the League of Arizona Cities and Towns. “That could mean that money that could go for raises or new personnel might have to be redirected for covering the costs of retirements.”
In 2011, Arizona lawmakers passed a law that undid several benefits in the emergency workers’ pension plan, including one that gave any investment gains in the fund above 9 percent per year to the retirees instead of keeping it in the fund as a cushion against the years when it lost value.
The law, though, was overturned in court this year because it was ruled to violate the state’s constitution, which includes a clause that says that there cannot be any impairment of benefits in the emergency workers’ pension plan.
As the law was being appealed, financial conditions deteriorated further, so Jeffries and his predecessor at the state firefighters’ association, Tim Hill, proposed raising the number of years that new emergency workers will need to begin collecting a pension, increasing member contributions and trimming cost-of-living increases. Jeffries said that the measures will save taxpayers tens of millions of dollars and could return the pension plan to full funding in 18 years.
To put the plan into effect, Jeffries wants to change the state constitution to allow for this one-time fix.
Critics call this strategy a half-step.
“If they were serious and genuine about wanting policymakers to manage these systems to keep them as opposed to running them off a cliff, then what they would have advocated for was the removal for the pension clause” from the constitution, said Kevin McCarthy, president of the Arizona Tax Research Association.