Border Patrol agent shot and killed on duty in southern Arizona; another agent wounded

In this photo provided by U.S. Customs and Border Protection, law enforcement officers gather at a command post in the desert near Naco, Ariz., Tuesday, Oct. 2, 2012, after a Border Patrol agent was shot to death near the U.S.-Mexico line. The agent, Nicholas Ivie, 30, and a colleague were on patrol about 100 miles from Tucson, when shooting broke out shortly before 2 a.m., the Border Patrol said. (AP Photo/U.S. Customs and Border Protection, Gabriel Guerrero)

Duluth News Tribune | Duluth, Minnesota.

Government Unions are Different

With our various levels of government grappling with revenues falling short of expenses, there is a long overdue focus being put on the state of government labor.  The recent Chicago teachers strike should be seen as an example of the excesses of government unions.  Reporting lumps all unionization into one category, and there is no distinction expressed between private and public unions. Public sector unions are different from private unions in that they have no “Free Market” competition to keep their demands in line.  In addition, the cozy relationship between the Democratic Party and public unions create a conflict of interest for elected officials.

In the private sector there are market restraints on what a union can demand.  If UPS (union) workers demand too much in compensation as to render their company non-competitive with FedEx (non-union), they will lose business.  This puts a “real world” restraint on what these unions can demand in terms of compensation and benefits.  Corporations can go out of business, which obviously would hurt the union employees.  GM & Chrysler notwithstanding, this market mechanism works well.  Government has no competition, and is in effect a monopoly in terms of the services that it supplies.  Therefore, there is no similar control placed upon public sector union demands.  If government workers go on strike, where else can consumers go to get their drivers licenses?

With the lack of market forces, taxpayers must rely exclusively upon management to say no to costly demands.  The managers who are sitting on the other side of the negotiating table are elected officials.  There is a political party, however, that is beholden to the very government unions they are supposed to be negotiating with.  The Democratic Party receives an overwhelming amount of money in political donations from public sector unions.  In fact, their top 4 donors are various government unions.  Many candidates go to union sponsored events, and pledge their support for union causes.  If a candidate for office received a donation from a corporation, then after being elected, gave a lucrative no-bid contract to that corporation it would be called corruption. How is this situation any different?

Considering most government entities (other than federal) must balance their budgets every year, you would think that politicians would be restricted from offering paybacks to the unions. They can’t give what they don’t have, right?  The problem with this argument is that the official has the ability to promise, and get passed into law, retirement and health benefits that will be paid for in the future. This takes away any current budgetary restraint that may exist, and puts us in the situation we find ourselves today all across the nation.

Our country is reaching a tipping point with all of the debts we have built up, and there needs to be a sober national conversation on these problems.  Without market forces, and the taxpayer representatives beholden to the unions, what chance do we have?  Nobody wants to talk about cutting pay or benefits, but the costs have simply gotten out of hand.  The taxes that will need to be levied to support this kind of uncontrollable spending will hit all Americans.  This issue is at the core of what kind of country, and opportunities we will pass on to our children.

via Government Unions are Different.

Phoenix pension reform is up to voters

Phoenix voters will decide whether to reform the city’s ailing employee-pension system.

City Council members moved Tuesday to put a pension-reform plan on the ballot for a March 12, 2013 election. Residents by law are the only ones who can change the pension system, which council members said has become a drain on the budget that pays for everyday services.

The proposed changes would increase the retirement age and contribution rate for new employees, saving taxpayers roughly $600 million over 25 years.

Taxpayers’ cost to fund the Phoenix Employees’ Retirement Plan has ballooned, from $28 million in 2000 to $110 million this fiscal year.

By reforming the system and requiring employees to pay more for their retirement, city leaders said they can spend more money on the services residents expect, such as police, fire, parks and social programs. The Council has enacted a food tax and cut services in recent years while pension costs soared.

The biggest source of savings under their plan is a provision that new employees pay the same amount toward their pensions as the city. Currently, employees contribute 5 percent of their paychecks for their pensions, as mandated by the city charter.

Phoenix’s contribution to the system is far higher — roughly 20.1 percent of each employee’s pay.

Multiple Council members have said it is an unfair obligation for the city’s general fund to bear.

The Council voted unanimously Tuesday to approve the plan recommended by City Manager David Cavazos. Their decision came after more than two hours of debate that highlighted the Council’s ideological divide over the scope and financial impact of employee benefits.

Proposed changes would apply only to new employees. Maricopa County judges have struck down changes to the state’s retirement system for existing employees, leading Phoenix officials to believe similar changes to the city’s system would not hold up.

The change also would not affect police officers, firefighters and elected officials because they are under state-run pension systems.

A minority of conservative-leaning Council members had attempted to place a cap on the city’s contribution, saying it would limit the risk to taxpayers.

That effort failed by a 6-3 vote.

Mayor Greg Stanton, who voted in favor of Cavazos’ recommendation, said he believes voters will recognize the “wisdom of this balance that has been struck.” Supporters said the proposal gives Phoenix money to restore and expand services, but does not put the city at a competitive disadvantage for employee recruitment and retention.

“I think that this recommendation gets it just about right,” Stanton said. “We simply cannot achieve our goals as a city unless we are a competitive workplace.”

The pension-reform proposal is the culmination of a process that began when former Mayor Phil Gordon appointed a pension-reform task force in early 2011.

Following recommendations from the task force, city staff modeled several scenarios, including a 401(k)-type plan, which would cost the city more up front.

Councilmen Bill Gates, Sal DiCiccio and Jim Waring argued that the city should cap its contribution at a set percentage.

Under their proposal, employees would pay the difference needed to fully fund the system, and could end up paying more than the city as a result.

Plans with a cap on the city’s contribution would save more money over the next 25 years — roughly $726 million at a 10 percent cap.

DiCiccio motioned to have the cap set at 13.6 percent — the projected contribution next fiscal year with an even split between city and new employees — and gradually lowered to 10 percent.

“The problem is … there were other plans that would save more money,” Waring said, objecting to the plan recommended by city staff.

“As far as I’m concerned, I feel like I’m on the side of the taxpayer.”

Changes set to be put before voters include:

Not allowing a new employee to retire until the combination of that person’s age and years of service equals 87. Workers currently can retire when their age and years of service total 80.

Employees who don’t meet the “Rule of 87” could still retire at age 60 with 10 or more years of service and 62 with five or more years.

Changing the formula used to calculate pensions so employees have an incentive to work longer.

With the current system, the multiplier used to calculate a retiree’s pension becomes less favorable on time worked beyond 32.5 years.

Giving the city more flexibility in how it can invest the plan.

Currently, the city cannot use certain types of investments that could increase its yield, such as private equity firms or high-yield bonds.

Allowing the city to put more money into the retirement system than required to meet its obligation for a single year. This would allow the city to pay down its unfunded liability in strong economic times. Under the current rules, it cannot contribute more.

via Phoenix pension reform is up to voters.

City staff take final comments on pension reform – Ahwatukee Foothills News: News

City of Phoenix staff took final public comments on pension reform Monday and Tuesday before presenting their final report to the City Council on Sept. 25.

City staff presented three scenarios for pension reform during the two meetings. The first would keep the city’s defined benefit plan but make contributions to the plan even between the employer and employee. That scenario would see an almost $600 million savings for the city over 25 years. The first scenario will most likely be the staff’s recommendation to council.

The second scenario was a defined benefit with a cap for the city’s contribution. Cumulative saving by 2037 is estimated to be more than $725,000 with the possibility for more saving depending on what the city’s cap is set at.

The third scenario was a defined contribution plan. Two models of the third scenario show the plan costing the city millions in the first 25 years. Rick Naimark, deputy city manager, said this model was requested by the City Council. It’s a plan that some people like because after 25 years there would be no more liability the city would have to pay for the pension plan.

Police, fire, elected officials and current retirees will not be affected by any pension reform.

Those at the meeting on Tuesday morning at the Burton Barr Central Library thanked staff members for their work. A current retiree expressed approval for the first scenario while Phoenix residents Chet Kite and Wes Harris expressed a desire for the staff to truly consider the third scenario.

“Since the year 2010 there have been 29 municipalities in the United States that have declared bankruptcy primarily because of the pension system,” Kite said. “There are basically two forms of retirement systems. One is a guaranteed pension, which COPERS (City of Phoenix Employees’ Retirement System) has, the second is a defined contribution, commonly called an IRA. The basic difference between these two systems is the first the city accepts the liability and responsibility for any variation in investments made. The second, the employee accepts the responsibility.”

The goals of the pension reform is to reduce the impact of COPERS on city budget, move to more equitable sharing of contribution and plan risk between employees and employer, increase length of service and maintain competitiveness.

A Pension Reform Task Force was created in January of 2011. The task force conducted 13 public meetings and made its recommendation to the City Council in February of 2012.

Council and staff have been reviewing the task force recommendations and watching as legal issues in the state’s pension plan have been worked out. On June 19 City Council adopted a time line and requested that staff return with more exact models and analysis of reform options.

The City Council is expected to review the reform options on Tuesday, Sept. 25 and possibly move to put the item on the March 12, 2013 ballot. If pension reform is put on the ballot the changes would take effect July 1, 2013.

For more information on the city’s pension reform process or to view the staff’s report, visit phoenix.gov/pensionreform, call (602) 262-6941, or email contactus@phoenix.gov.

via City staff take final comments on pension reform – Ahwatukee Foothills News: News.

Phoenix unveils pension-reform plan

Phoenix has unveiled a plan to reform its ailing pension system that would require new employees to contribute more and work longer, potentially saving taxpayers $600 million over 25 years.

The changes are aimed at lessening the burden of retirement costs on its general fund, which pays for day-to-day expenses like public safety and parks.

In recent years, the city has cut services for residents and enacted a 2 percent food tax while its pension costs spiked.

The plan’s central provision is that new employees would pay the same amount toward their pensions as the city. Currently, employees contribute 5 percent of their pay for their pensions, as mandated by the city charter.

Phoenix’s contribution to the plan this year is roughly 20.1 percent of each employee’s pay.

City Council members will consider the changes, recommended by City Manger David Cavazos, at a meeting Tuesday afternoon.

The plan would overhaul Phoenix’s retirement system for new hires — no existing employees would be affected.

Any reforms the council agrees to would go before voters in a March election.

By law, only residents can change the Phoenix Employees’ Retirement Plan.

Mayor Greg Stanton said the proposal, released Thursday by city management, strikes the right balance by limiting the city’s financial liability and providing a benefit that’s attractive and helps to retain and recruit quality workers.

“We are going to be able to put significantly more resources into police, fire, our library system, parks and recreation,” Stanton said. “Under the proposal, it’s a true partnership with our employees. We share in the risk. We share in the benefit.”

But some conservative council members say it doesn’t go far enough.

They have pushed for a cap on the city’s contribution, which would limit the city’s obligation to a set percentage. As a result, employees would likely end up paying far more than the city.

Councilmen Sal DiCiccio and Jim Waring said Thursday that they will push for a cap on the city’s contribution.

DiCiccio said he would have preferred to see the city transition to a defined-contribution system similar to 401(k) plans in the private sector, but concedes he does not have enough council support.

“These costs are skyrocketing,” DiCiccio said. “The taxpayers need to be protected. I’m going to try to see if I can rally the votes for (a contribution cap).”

The proposed changes would apply only to new employees. Because Maricopa County judges have struck down changes to the state’s retirement system for existing employees, Phoenix officials believe similar changes to the city’s system would not hold up. .

The reforms would also not affect the pensions of police officers, firefighters and elected officials, who all are under state-run pension systems.

Other changes being considered to put before voters include:

Not allowing a new employee to retire until the combination of that person’s age and years of service equals 87. Workers currently can retire when their age and years of service total 80.

Employees who don’t meet the “Rule of 87” would still be able to retire at age 60 with 10 or more years of service and 62 with five or more years.

Changing the formula used to calculate pensions so that employees have an incentive to work longer.

With the current system, the multiplier used to calculate a retiree’s pension becomes less favorable on time worked beyond 32.5 years.

The pension-reform proposal is the culmination of a process that began when former Mayor Phil Gordon appointed a pension-reform task force in early 2011.

Members of the task force spent a year looking at how to reform Phoenix’s pension system, which will cost residents $110 million this fiscal year.

Following the recommendations, city staff modeled several scenarios, including a 401(k)-type plan, which would cost the city more up front.

Plans with a cap on the city’s contribution would save more money over the next 25 years — roughly $726 million at a 10 percent cap.

Cavazos said a cap on the city’s contribution would be a barrier to hiring and retaining qualified employees as they could end up paying more than the city.

He said an even split makes Phoenix’s pension benefit similar to the state’s and other Valley cities.

“The biggest risk to us is not having outstanding employees,” Cavazos said.

via Phoenix unveils pension-reform plan.

Public input mitigates potential controversy about Phoenix pension reform – Phoenix business insight | Examiner.com

Pensions used to be taken for granted by workers and ignored by the press. However, this year, pensions were controversial during the Wisconsin Governor’s recall election, are part of the striking National Football League referees’ demands, and, were a concern for striking Chicago teachers. Here, a forum at Burton Barr Library on September 18, discussed steps the City of Phoenix is taking to mitigate any public controversy about its proposed pension reform plan for city workers.

Phoenix is unique. While other Western cities (e.g., San Bernardino) filed bankruptcy, Phoenix enjoys a budget surplus. Also, being a relatively young big city, the number of current employees (8,569) paying into the retirement system exceeds the number of retirees (5,191) drawing pensions. But, while employees’ input is capped at 5%, the City contribution continues to grow (18%). To correct that inequity, account for the increase in retirees, and avoid future budget deficits, a task force was appointed in 2011 to study pension reform.

Most were surprised to hear that Arizona’s Constitution has some of the US’ strongest employee contract protection laws. Entities are not allowed to diminish retirement benefits for current employees. Therefore, the task force focused on changes for future City employees.

The task force’s recommended reforms include changes in retirement eligibility, incentives to work longer, and the city/employee contribution ratio. The Phoenix City Council will vote on the City’s recommendation at the Council policy meeting on September 25. What makes this Phoenix pension reform process extraordinary is the breadth of pubic involvement.

There were 13 meetings of the citizen task force; two public meeting, like the September 18 one; and people are encouraged to attend the Council meeting. Then pension reform will be a ballot measure on March 12, 2013. ““We wanted total transparency,” explained City Manager David Cavazos. “We want people to understand what they are voting for in March.”

Attendees, which included ex-employees, community group representatives and interested citizens, at the library, praised the plan for considering public opinion, increasing efficiency, and being attractive to future talent; and expressed concerns about the projected savings, and time for public involvement.

Of course, in March, there will be people who rail about bloated government and overpaid workers, and others who remain oblivious. But the City should be commended for giving the public the opportunity to influence an important issue that affects the pocketbooks of all people and businesses in Phoenix.

via Public input mitigates potential controversy about Phoenix pension reform – Phoenix business insight | Examiner.com.

Pension reform added to 2013 ballot, Stanton and council unanimously agree – East Valley Tribune: Ahwatukee Foothills

The city will ask voters next spring to approve changes to a proposed pension reform as the Phoenix City Council unanimously voted for it to be on the March 2013 ballot.

Mayor Greg Stanton said in a statement following the council’s policy session that “reform is an important issue, both to taxpayers and to city employees.”

Details of what exactly will go through modifications to the current pension program won’t be certain until later this year. The council will be presented with data in October, modeling the impacts of the possible changes to the city of Phoenix Employee Retirement System, said Brandi Ishcomer of the City Manager’s Office.

Staff will work with the consulting team during the City Council’s summer recess to gather that data, according to Ishcomer.

The proposed changes presented to council last December by the Pension Reform Task Force included modifying retirement eligibility. The changes would establish normal retirement age of 63 with a minimum of 10 years of service and an early retirement age of at least 55 with 10 years of service.

The proposed pension changes, if approved, would take effect July 2013.

“We have to do right by our hard-working taxpayers and our hard-working city employees so that a fair outcome benefits our city’s future economy as a whole,” Stanton said.

via Pension reform added to 2013 ballot, Stanton and council unanimously agree – East Valley Tribune: Ahwatukee Foothills.