Oct. 31, 2013
Combined Anti-Spiking Measures Expected to Save Estimated $130 Million Over 25 Years
Mayor Greg Stanton and the Phoenix City Council today voted to end pension spiking abuses, which will eliminate the ability of current and future city employees to collect lifetime payments on future leave accruals as well as phone and car allowances.
Although a final actuarial analysis is not yet complete, the City’s anti-spiking measures are expected to save at least $130 million over the next 25 years. A more extensive pension overhaul – passed by nearly 80 percent of Phoenix voters in March – will save taxpayers an additional $600 million over 25 years.
Employee unions vocally opposed the recommendations of the Pension Fairness and Spiking Elimination Ad Hoc Subcommittee at six public meetings, but Stanton said adopting the measures was the right thing to do.
“Pension spiking abuses are unfair and wrong,” said Stanton. “Making lifetime pension payments off unused vacation or sick leave or a cell phone allowance is indefensible, and it has to stop. Both employees and taxpayers deserve a pension system that is fair and transparent – and we’ve made important strides toward that goal today.”
Councilman Daniel Valenzuela said today’s vote works to ensure responsible and fair pension system. “I believe this reform preserves the public trust because it respects, first and foremost, our taxpayers-at-large – which includes thousands of city employees,” he said.
“Today’s vote was a win for city employees and for taxpayers,” said Councilman Tom Simplot. “We listened to their stories and concerns, and we struck a fair balance. By taking action, we have protected what current employees have earned and built a more sustainable system for the future.”
The subcommittee’s recommendations are among the toughest anti-spiking measures passed in the nation. Most other government bodies have only sought to end spiking for new employees – but Phoenix’s measures will affect all employees.
Specifically, the recommendations:
- Eliminate counting future sick and vacation leave compensation toward a pension for all employees.
- End the use of allowances, such as communications and travel allowances, for pension calculation for all employees.
- Begin to overhaul our leave system to stop the practice of allowing unlimited sick leave accrual.
New policies that will affect rank-and-file employees will go into effect on July 1, 2014, and will be codified through the labor negotiation process. Today’s vote has the effect of communicating to employee unions that the Council will not approve a contract that allows pension spiking to continue.
Arizona law expressly prohibits the City from stripping employees of compensation and pension rights that have already vested, which is why the subcommittee took aim at future accruals.