Arizona’s public safety retirement program has had challenges for years. Local governments have had to strain their budgets to keep up with rising pension costs and in some cases avoid hiring first responders because of it.
The Arizona Public Safety Personnel Retirement System has an important job in funding the pensions of people who have an earlier retirement than other government employees. The reason for that is the jobs are sometimes hazardous and require a certain amount of youth. Therefore the system needs and receives substantial funding. Also, state law has made any modification of the system difficult, and there have sometimes been abuses that have inflated pensions.
Meanwhile, the system’s board has a practice of rewarding APSPRS employees with bonuses while their performance is lacking. According to The Arizona Republic, the board awarded retroactive bonuses totaling $120,000 to three executives. The estate of a deceased former employee got $51,000. The board late last year gave its administrator a 20 percent raise and made it retroactive to the beginning of the year, and procedures provide limited transparency. Pew Charitable Trusts ranked the system 37 out of 41 major public pension trusts last year on investment return.
This occurs while financial markets have been doing quite well. However, the state and various public entities can always fall back on taxes to keep the money flowing. The poor performance of APSPRS has been occurring for years while it paid out substantial funds for outside advice. The trust, totaling $10.3 billion, had a return of 7.1 percent last year while the Arizona State Retirement System, which represents many public employees, got 9.4 percent.
Shouldn’t the state consider having ASRS run the public safety retirement system? Arizona is known for pretty good government at various levels, and this bad example sticks out while it costs taxpayers and sometimes limits public safety services. Arizonans should expect better than having a board that rewards poor performance.