Blame economy, not ‘spiking’, for pension woes

This article appeared in the AzRepublic

OurTurn2Union officials: Stop name-calling, focus on real solutions

By John Ortolano and Sean Mattson Our Turn Sun Nov 17, 2013 7:34 PM

For years, Arizona taxpayers have read stories about underfunded police and firefighter pensions.

Articles have focused on a few top managers — chiefs and assistant chiefs with 30-plus years of service — while rarely mentioning the middle-class retirement earned by the rank and file.

The stories also generally have featured accusatory quotes from politicians ranting about the “greed” of “evil unions” and “union bosses.”

Stories about “spiked” payouts may generate headlines, but they neglect the real cause of the current state of the Public Safety Personnel Retirement System.

Is PSPRS partially funded? Yes. Has this been caused by spiked pensions and enormous benefits paid to retirees? Absolutely not. The pension system has suffered because greedy financial institutions repeatedly victimized Arizona taxpayers and our families.

You may recall the two epic financial meltdowns of 2000 and 2008. But you may not remember what caused these crashes — corporate lawbreaking, accounting scandals, regulatory failures and toxic investment schemes that paid billions to Wall Street corporations and CEOs at the public’s expense.

Before the 2000 crash, PSPRS was 120 percent funded. That crash siphoned off nearly $1 billion in fund assets. Then came the 2008 crash. Megabank Lehman Brothers and AIG, the world’s largest insurance company, collapsed after dealing in toxic investments. Markets plunged, accompanied by global recession, and left 30 million people left jobless.

The 2008 collapse drained another $1 billion-plus from PSPRS. The ramifications continue to be felt: JPMorgan Chase recently reached a tentative agreement with the Justice Department to pay a record $13 billion settlement. Not a dime will be used to repay retirement systems for their losses.

These Wall Street-caused crashes rarely get mentioned in stories about PSPRS. Instead, we hear about politicians seeking to punish public servants falsely depicted as getting rich at taxpayers’ expense.

The truth? The health of PSPRS, like our economy, will take time to recover. Fortunately, recent structural changes have the system on track to make a full recovery, another fact that rarely gets mentioned.

For decades, the Arizona Fraternal Order of Police has worked to improve the health of the retirement system. In 2005, we participated in stakeholder meetings aimed at heading off this crisis. In 2011, we worked with the Legislature and the governor on changes to shore up PSPRS.

We believe there are solutions for Arizona’s pension issues.

That solution-oriented conversation is long overdue. Instead, while politicians and pundits spend valuable time name-calling, the men and women on the front lines have taken furloughs and pay cuts and scrimped to cut millions in overtime, saving vital services for taxpayers.

Our commitment has not wavered, even as our retirement plans have dwindled. We wish those in a position to solve this issue shared our commitment to real solutions and to the community.

John Ortolano is president of the Arizona Fraternal Order of Police. Sean Mattson is president of the Phoenix Police Sergeants and Lieutenants Association.