Studying City Pension Systems

August 16, 2013

The Goldwater Institute has sued the city of Phoenix to stop so-called pension spiking, mainly among police officers and firefighters.  That practice allows workers to cash in unused vacation or sick time before they retire, which increases their pensions, and it has been an issue in this month’s city council elections, as some of the candidates in districts 4, 6 and 8 spoke about at the forums hosted by KJZZ.

This issue is not just coming up now. In March, Phoenix voters approved some changes to the city’s pension system, and in January, the Pew Center on the States published a report looking at city pension systems in 61 of the country’s biggest cities.

There was not a ton of great news in there. It found 37 of those cities, including Phoenix, funded their pensions below 80 percent. The report said many experts cite that level as inadequate.

To find out more about how city pension systems are doing, we called Jason Seligman. He is an assistant professor at the John Glenn School of Public Affairs at The Ohio State University and has studied pensions. He said the Great Recession makes an easy culprit for pensions’ problems between 2007 and 2009, but Seligman said there is more to it than that.

Seligman said pensions have had a pretty rough decade, going through two recessions, demographic shifts and generally bad city budgets. So he said cities have started taking action.

For the record, the Pew report found both Columbus, Ohio and Phoenix funded their pensions at about the same levels, right around 73 percent.

UPDATED: 8/17/13 6:30 AM

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