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President Piccioli On Pension Reform In National & Local News

6/27/2014

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The Washington Post
Phoenix Pension-Cost Spiral Fuels 401(k) Vote Push: Muni Credit

James NashMay 16, 2014 8:27 am ET

May 16 (Bloomberg) -- Phoenix, facing pension costs that have doubled in six years, may become the largest U.S. city to put new workers in 401(k)-style plans if voters pass a ballot measure in November.

Backers of the plan say a move last year to roll back pensions didn’t go far enough to curb retirement expenses, which swallowed $218 million, or 22 percent of Phoenix’s general-fund expenditures in the year through June 2013, up from 11 percent in 2007, budget documents indicate. Standard & Poor’s cited the costs in stripping Phoenix of its AAA rating in December.

Investors get to weigh in on the sixth-most-populous city’s fiscal wellbeing next month, when Phoenix plans to sell $297 million of debt. The state’s capital city still has time to get a handle on its pension obligations, said Todd Curtis, who manages the Aquila Group of Funds’ $271 million Aquila Tax-Free Trust of Arizona.

“Pensions are a growing concern within the credit analysis of any city in the country,” Curtis said from Phoenix. “Being an Arizona buyer, I am not too worried about Phoenix. They have a long history of taking steps to balance their budget.”

Pension Deficit

Local officials nationwide are contending with pension deficits exacerbated by the recession that ended almost five years ago. The 25 most-populous U.S. cities have more than $125 billion less than needed to meet promises to retirees, according to Morningstar Inc.

Unfunded obligations for pensions and retiree health care are crowding out spending on schools, police and libraries, Pew Charitable Trusts said in a March 2013 report. Pension costs have helped tip Detroit and the California cities of Stockton and San Bernardino into bankruptcy since 2012.

Phoenix pensions are 61 percent funded, trailing the median of 75 percent for the 25 largest cities, Morningstar said in a December report. The proportion of Phoenix’s spending going toward pensions is the group’s third-highest, trailing California’s San Jose and San Diego, according to Morningstar. Voter-approved changes in March 2013 should ease the pressure on Phoenix, the company said.

Phoenix Rising

The city of about 1.5 million has rebounded from the recession, which led to the smallest municipal workforce in 40 years and cuts to parks, recreation and cultural facilities, Pew said.

Home prices in Phoenix reached a five-year high in November, although they’re still down almost 40 percent from a 2006 peak, according to the S&P/Case-Shiller property-value index.

Phoenix balanced its budget last year as the rebounding economy boosted revenue, allowing it to restore police and fire services, pool and library hours and programs for youth and seniors. The city cut services to deal with a $277 million budget shortfall two years earlier caused by declining tax revenue, according to the city’s 2013 fiscal report.

Pension costs threaten to reverse the progress, Jim Waring, the vice mayor, said in an interview.

Benefit Crossroads

Waring, a Republican, supports the November ballot measure to cap pension benefits available to current employees -- a measure intended to curb padding of benefits through late-career raises and special pay -- and to put new civilian hires into a 401(k)-style system rather than a defined-benefit pension. The 401(k) is a tax-deferred retirement account that workers manage themselves.

Savings would total $150 million in the first 10 years, said Scot Mussi, executive director of the Arizona Free Enterprise Club, which backs the measure. City officials haven’t produced an estimate.

Phoenix would be the most-populous city to replace pensions with 401(k)-type accounts for new hires, said Jordan Marks, executive director of the union-backed National Public Pension Coalition. Voters in San Diego approved such a system in 2012, and it went into effect that year.

“Where we’re going to be in 20 years is a potentially unsustainable path,” Waring said. “We’re trying to get ahead of the curve.”

Phoenix, which hasn’t offered general-obligation debt since 2012, plans to refinance bonds issued in 2003, 2004 and 2005, said Treasurer Randy Piotrowski. The city plans to price the bonds June 2, he said.

Highest Rating

Even after S&P downgraded Phoenix in December to AA+, its second-highest level, Phoenix is still tied with Houston for the highest rating of the seven most populous cities.

“Pension costs have been on the radar of all investors,” Piotrowski said. “However, we haven’t heard any direct concerns from investors.”

The pension change that voters approved last year -- which increased employee contributions toward pensions and established later retirement ages -- is projected to save $600 million over 23 years, the city’s then-acting chief financial officer, Neal Young, wrote in the 2013 fiscal report.

The population of Phoenix, home of PetSmart Inc. and Freeport-McMoRan Copper & Gold Inc., grew almost 3 percent from 2010 to 2012, according to the U.S. Census.

Waring said the measures, which were backed by Democratic Mayor Greg Stanton, didn’t reverse the growth in pension liabilities.

Stanton’s policy director, Seth Scott, didn’t return two phone calls and an e-mail message seeking the mayor’s position on the latest initiative.

‘Free Market’

The Phoenix Pension Reform Act is principally funded by the Arizona Free Enterprise Club, according to its website. The club, which describes itself as a “free market policy and lobbying group,” raised $501,000 in 2012, all through membership dues, according to its most recent tax filing.

City unions have formed the Arizona Retirement Security Coalition to fight the measure. Money from outside Phoenix is fanning the perception of a pension crisis to persuade voters to hand over management of municipal retirement accounts to private firms, said Frank Piccioli, president of the American Federation of State, County & Municipal Employees Local 2960, which represents about 2,200 city employees.

Marks of the National Public Pension Coalition was in Phoenix this week planning how to defeat the measure. Marks said Phoenix could set a “dangerous” precedent for stripping municipal workers of guaranteed pensions.

Piccioli couldn’t name the funders of the drive to cut pensions, and Mussi declined to name donors. Neither side of the ballot measure has filed financial disclosure statements ahead of a June 30 deadline.

“The long-term outlook is a very healthy pension system,” Piccioli said. “We are not in crisis. This is not Detroit.”

Ahwatukee Foothills News
Groups set to face off over pensions

Posted: Tuesday, June 17, 2014 8:43 am | Updated: 1:44 pm, Tue Jun 17, 2014.

By Allison Hurtado, Ahwatukee Foothills News

The lines have been clearly drawn for those in favor of the Phoenix Pension Initiative, who would like to see the city create a more sustainable pension system, and those against it, who say a dramatic change would cost taxpayers millions to carry out.

The initiative, which will show up on the November ballot, aims to end pension spiking and move all new hires at the city of Phoenix to a 401(k)-style pension. Those in favor say the system right now is costly for taxpayers and unsustainable. Those against it say it’s unnecessary and risky.

“Phoenix voters approved two sweeping overhauls to the pension system last year that are saving the city an estimated $600 million dollars,” said Tom Simplot, co-chair of the Phoenix Citizens for Pension Responsibility, the group opposing the initiative. “When we went to the voters in 2013, we rejected what is proposed in the initiative because it was determined to be too expensive to Phoenix taxpayers.”

Phoenix Citizens for Pension Responsibility’s other co-chair is retired city of Phoenix Budget and Research Director Cathy Gleason. Former Mayor Phil Gordon serves as honorary chair.

The group says the city already passed several measures in the past year to address pension spiking. A recent report from the city’s actuary, Cheiron, showed that the cost of implementing the ballot initiative would be up to $477 million over 20 years.

“As the former director of budget and research for the city, Phoenix can’t afford this radical initiative,” Gleason said. “This is a bad deal for both Phoenix taxpayers and city workers, most of whom receive modest pensions averaging less than $30,000 a year.”

Those in favor of the initiative, like City Councilman Sal DiCiccio, say the report is wrong.

“It goes back to the conflict of interest,” he said. “City staff hires their own people in order to create reports that they want to see in return. They don’t talk about pension spiking, stopping rollovers or ending payouts. It’s all designed under a conflict of interest because they hire them.”

DiCiccio said there are some parts of the initiative he doesn’t like but he thinks the two main points — stopping the current pension system and moving new employees to a 401(k) — will fix the problems and save the city millions.

He recently came out with numbers showing how much the top 50 retirees from the city of Phoenix over the last 10 years are costing the city.

“Fifty of the top retirees, which I consider the millionaires at the city of Phoenix, when they retire, will receive $183 million by the time they are 75,” DiCiccio said. “We found that average payout at retirement was $193,000 ... They get to cash in their vacation, sick leave and deferred compensation at a conservative number of $193,000 without any compounding in that. When you look at that, that tells you what the problem is at the city of Phoenix.”

The initiative is being organized by the Arizona Free Enterprise Club. Scot Mussi, executive director of the group, says the initiative will stop the abuse and will save taxpayers money from day one. Any cost, Mussi said, is actually the city paying off debt from the current system.

• Contact writer: (480) 898-7914 or ahurtado@ahwatukee.com.

Arizona News Radio
Pension Reform Measure: Pros And Cons
Posted on 6/10/2014 5:08:00 PM.

Ex Phoenix City Hall officials are telling voters an upcoming ballot measure touting pension reform is not what it claims to be.  They’ve formed a coalition warning voters to reject the initiative earmarked for the November ballot.  Former City Councilman Tom Simplot says the proposal makes extreme changes to the current pension system by trading it in for a “risky” 401-“K” type system, eliminating current benefits for new employees and imperiling the city’s fiscal health. 

Ex city Budget Director Cathy Gleason adds, a study finds the proposal would cost Phoenix taxpayers as much as 477 million dollars over the next twenty years.  A big folly, she says, when  you consider Phoenix voters already passed real pension reform just last year.

But City Councilman Sal Di Ciccio says the initiative can put an end to government employees gaming the system. “We’ve had multiple individuals, usually at the higher level, leave the city and they hop from one pension to the next,”says Di Ciccio, “so by the time they’re in their ‘60’s they’re able to get two pensions, not one.”

Di Ciccio also cites the case of a librarian who retired at the age of 58 who got a combined $286,000 cash payout for vacation, sick leave and deferred compensation on top of her $102,000 pension a year. He says, compare that with your average private sector worker who gets $15,500 a year for Social Security at age 62.

But Simplot and others argue this ballot measure purporting to be pension reform is driven by anonymous dark money, and Simplot surmises the initiative could well be aiming to do away with the pension program altogether.

--Barbara Villa
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Funeral Services For President Piccioli's Sister

6/16/2014

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Funeral services for Veronica "Roni" Piccioli will be Thursday, June 19th at Noon at Saint Andrew the Apostle Catholic Church - 3450 W. Ray Road Chandler, AZ 85226.


Internment will follow at Queen of Heaven Cemetery - 1562 E. Baseline Road Mesa, AZ 85204


All Union Members & City Employees are welcome to attend.  Flowers can be arranged through Queen of Heaven Mortuary (480) 892-3729


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2014 - 2016 MOU

6/13/2014

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2014 - 2016 AFSCME 2960 Unit 3 MOU
File Size: 350 kb
File Type: pdf
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Pension Reform On The Ballot

6/13/2014

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Great Video Clip & Radio Clip On The Upcoming Pension Reform Ballot Measure!

www.azpbs.org

www.kjzz.org
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2014-2016 Unit 3 MOU; Bank of Donated Leave

6/4/2014

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image2014-06-03-145949.pdf
File Size: 362 kb
File Type: pdf
Download File

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Proposed Changes to Phoenix Pensions Would Cost Taxpayers Millions

6/4/2014

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Analysis shows initiative would cost city up to $477m over 20 years

PHOENIX- A fiscal analysis today released by the City of Phoenix shows that a proposed ballot measure to make drastic changes to the Phoenix pensions system would cost taxpayers up to $477 million. The City of Phoenix Employees’ Retirement System’s actuary, Cheiron, conducted the analysis and found that the twenty year cost of the proposed changes is $216-477 million, utilizing an employer contribution range of 3-6%.

Funded by out-of-state dark money and shrouded in secrecy, the so-called Pension Reform initiative would abolish the current pension system for Phoenix employees and is scheduled to be on the November ballot.

Catherine Alonzo, on behalf of the National Public Pension Coalition says the numbers don’t lie. “With a price tag of over $400 million taxpayer dollars, this initiative will break the bank and cripple Phoenix,” said Alonzo. “This report shows how urgent the need for transparency and honesty is. Voters deserve an opportunity to examine the cost of these proposed changes in the light of day without the spin being pushed by out-of-state interests.”

If approved by voters, the so-called pension reform initiative would abolish the current pension system and force city employees into riskier 401k retirement accounts.  Phoenix voters last year approved reforms to the city’s pension system that has put the city’s pension system on the road to solid financial footing.  The proposed new initiative would undo those voter-approved changes as well as the taxpayer savings they created.

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