The Retirement Security Initiative this week salutes Arizona Senate Finance Chair Debbie Lesko for her tenacious efforts to overhaul the state’s public safety pension plan, successfully turning the tide on a system that was at risk of collapse. Sen. Lesko’s thoughtfully-crafted reform legislation, which was signed into law last month, champions Arizona’s hard-working public safety employees and their retirement futures, while protecting taxpayers.
When Sen. Lesko took over chairmanship of the Senate Finance Committee, which oversees legislation dealing with taxes and public pensions, Arizona’s Public Safety Personnel Retirement System (PSPRS) was in crisis with nearly half the money needed to fully fund its pension obligations (PSPRS currently has $12.7 billion in liabilities and $6.2 billion in assets). By assembling the Public Pension Reform Working Group, Sen. Lesko and her committee explored ways to healthily sustain the public safety retirement system. And they did it thoughtfully by making it a bipartisan effort and including the PSPRS, firefighters and police associations, and city and local governments. Sen. Lesko effectively gave all stakeholders a seat at the table and a voice in the discussion.
When all was said and done, the collaboration resulted in pension reform that replaces the system’s cost-of-living formula structure with a traditional Consumer Price Index-based calculation for employees and retirees; offers new workers a choice between a full-defined contribution plan and a traditional pension plan; and requires new employees and their employers to share equally, 50/50, in retirement account costs. The reform package is projected to save PSPRS $1.5 billion over 30 years.
RSI believes that successful pension reform must include collaboration and partnerships. Solutions to funding and cost crises need to be developed with input from employees, retirees, labor, management, taxpayers and fiscal experts. That’s why Sen. Lesko is our hero of the week. Her success at achieving consensus through efforts to include all stakeholders should be the rule of thumb for states and municipalities facing similar pension reform challenges, and not the exception.