A citizens group hopes to dramatically alter how the city provides retirement benefits for its employees. And it's trying to bypass the City Council to do it, by putting the issue on the November ballot.
To qualify for the ballot, the group needs 12,730 valid signatures before July 5. Peter Zimmerman, a consultant for the Committee for Sustainable Retirement, said although the deadline is tight, he anticipates the group will be successful because it's had 12 paid circulators collecting signatures since Saturday.
The petition drive is being financed, at least in part, by the Liberty Initiative Fund, a national organization dedicated to public policy advocacy, Zimmerman said. He said the fund provided the seed money to get the petition drive going, but he didn't have the specific amount.
The petitioners fear the city's current retirement system is unsustainable and will land the city in financial ruin.
"If they don't solve the problem of the underfunded pension funds, either it's going to become a greater burden for the taxpayers or the city's going to have to cut services," Zimmerman said. "At the same time, it ensures city employees who put in their time and earned there retirement are able to collect their retirement. … So I think it's a win-win for everybody."
Non-public-safety employees contribute a percentage of their income to the city's retirement investment pool. In exchange, the employees receive a fixed retirement check each month for the rest of their lives, regardless if whether the city's investments earn enough interest to cover the benefits. Since this defined-benefit program guarantees results, the taxpayers cover the difference each year - currently about $27 million a year.
The defined-benefit plan is becoming increasingly untenable due in part to longer retiree life spans and unpredictable investment returns. So the group wants the city to go to a defined-contribution plan similar to what many private-sector companies now offer. Employees would still contribute a portion of their paychecks, but now their retirement checks would depend on how much they contribute and how well the city's investments perform.
While employee benefits would fluctuate based on market performance, taxpayers would be off the hook, eventually, for any underperformance in the Tucson Supplemental Retirement System.
The city would still likely contribute some amount to the employees' pension system, but it would be something labor and city officials would have to work out.
Current employees or current retirees would not be affected by any changes.
Although the city's $940 million retirement fund is underfunded by 37 percent, it's actually manageable compared with the city's biggest pension threats: the police and fire retirement plans.
Those are less than 50 percent funded and have a $540 million liability. Next fiscal year alone, the city will pay $42 million for the two retirement funds, a 20 percent increase from this year.
If nothing changes, those yearly costs could increase about 50 percent by 2027. But those pensions are controlled by the state, and it's unclear what, if anything, the city can do to keep those costs down.
Contact reporter Darren DaRonco at 573-4243 or email@example.com