Arizona’s public safety retirement system has had underfunding problems for years. The management of it also is an embarrassment. Perhaps it is time for major change.
The Public Safety Personnel Retirement System has forced public employers to pay substantially more per employee recently. Such retirements are expensive because they cover police and fire personnel who cannot work as long as others, but it appears mismanagement also is part of the equation. These higher payments have put a strain on government budgets in Pinal County and elsewhere and also led to lower staffing by first responders in some cases.
The system is run by a board and administrators who have had a litany of problems. Board members have had excessive reimbursements for travel and made commissions on side jobs awarded by the administrator. That administrator received a $43,000 retroactive pay increase to a quarter million dollars a year but was fired a short time later after allegations of sexual harassment and spying on employees.
In 2018, the system made a return of 7.1% on its investments while the system responsible for other state retirees’ pensions made 9.4%. Pew Charitable Trusts has called the public safety system one of the worst-managed government trust funds in the nation.
Arizonans expect better performance from their government, and they usually get it. This ongoing combination of low ethical standards and poor management of money is unacceptable. Arizona has two much better agencies that manage money, the state Treasurer’s Office and the Arizona State Retirement System. Tapping one of those to run the public safety fund would be a much better bet and could come faster than making further attempts to clean up the mess.
The Legislature is in session, and Gov. Doug Ducey has demonstrated in the past his impatience with poor performance. It is time for the PSPRS to disappear.