The Pension Fairness and Spiking Elimination Subcommittee, a hand-picked group by Mayor Stanton, voted to recommend a list of four reforms to the full Phoenix City Council for a vote at its October 22 meeting. Phoenix City Councilman Sal DiCiccio says the taxpayers will lose if the proposal is approved.
“Real pension reform is needed now, not some phony baloney proposal that was designed to take advantage of hardworking taxpayers,’ said DiCiccio to constituents.
Stanton created the subcommittee as a result of demands by DiCiccio and the public outcry for reform as information about the practice became known. Pension spiking raises some employees’ annual retirement payments by inflating their end-of-career compensation. That compensation is then used to calculate the annual pension benefit.
In some cases, employees earn more in retirement than they did working for the city.
DiCiccio notes that the most costly spiking has been done with senior managers and executive-level public-safety officers, only police and fire personnel’s vacation and sick time was targeted. “Allowing high ranking managers to continue clearly shows the conflict of interest that created the current pension system,” says DiCiccio. “Pension spiking cheats the public… and should be stopped for everyone. This reaffirms the ability of individuals to make more money in retirement than while they were working.
“Mayor Stanton broke his promise to completely end the food tax, and now he breaks his promise to completely end pension spiking. By keeping his promise to protect the government unions, he has hurt taxpayers and this plan gives the illusion of stopping this bad practice when in fact, it is smoke and mirrors,” DiCiccio continued. “When you have the chairman of the committee vote against the proposal, you have a significant problem. It has been 647 days since he made that promise and the taxpayers deserve that promise to be kept.”
According to DiCiccio, “It is not unusual for city staff to accumulate 2,000 hrs. of sick leave and then turn those hours in like casino chips at retirement. They cash in their sick leave at the highest rate possible at the highest ending wage. Tell me how that is fair to taxpayers.”
In 2011, Phoenix had 10 people retire with lump sum payouts of over $700,000 and then started their yearly pensions in excess of $100,000 per year.
One person spiked his pension from $96,000/yr to $136,000 a year for life after receiving a cash payout of over $750,000.
In 2008, total retirement costs were $202 million.
The debt will continue to grow approximately $20 million per year.
$2.4 billion is the total unfunded pension liability that the city owes.
An entry level clerk gets 40.5 days of sick leave, vacation, personal and holidays.
DiCiccio says that the “system was designed by the insider to benefit the insiders. There was clear conflict of interest at the pension meetings. The people negotiating labor agreements are insiders negotiating with other insiders across the table knowing that anything they negotiate away impacts them directly. They give the legal opinions that support the current system, they prepare the reports that support the current system, and they make the presentations that support the current system. Anywhere else this would be against the law.”
According to DiCiccio, “There is a current lawsuit against capping hours for city employees. According to an outside attorney, this is the worst legal tactic by the city. So, a plan which was the worst legal tactic was instituted and also has the best bet for failure. If the tactic designed by staff fails, city staff wins and they get more money. If it fails, it was designed to fail. It is a clear conflict of interest that was designed to provide the worst legal defense.”