Double dipping on the taxpayer's dime
Reporter: Tammy Vo
TUCSON (KGUN9-TV) - 80 Is the new 65 when it comes to retirement, says a recent study done by Wells Fargo. It found that most middle class Americans plan to work longer in order to save for retirement.
Jerry Anderson of Tucson tells KGUN 9 how he prepared for retirement. "I worked long hours" he said while enjoying a game of table tennis at Armory Park.
What about government workers? Their retirements are supported by taxpayer funded pension plans.
"It's very sweet" says Byron Schlomach, Chief Economist at the Goldwater Institute, a non-profit out of Phoenix. He wrote a detailed report about Arizona's pension system which he calls "a ticking time bomb".
"How healthy is Arizona's pension system?" asked KGUN 9 Reporter Tammy Vo.
"It's ill" answered Schlomach.
If you're not getting a public pension, you're probably paying for someone else's. Here's how they work: Full-time government workers are entitled to a pension. Some who are already in the system can retire after just twenty years. If they're signed up for the DROP program, they can even cash in on a lump sum payment of around $260,000 plus their pension. Because they can retire so early, many look for another government job thus making them eligible for a second government pension.
For example, Richard Miranda used to be Tucson's Police Chief. He retired and now gets a state pension of $135,887 a year for the rest of his life according to city records. Now, he's Tucson's Assistant City Manager and makes $166,940 a year, bringing in a total of more than $302,000 a year. If he stays there for another two and a half years, he'll get a second annual pension of $22,837.
Terry Rozema is 47 years old and recently retired from Tucson Police. Records show that he'll get $81,272 in pension benefits for the rest of his life. Now, he's Marana's Police Chief and makes $127,500 year, bringing in a total of around $208,000 annually. He's also now part of another state retirement system that will pay him another pension for the rest of his life if he stays there for another 15 years or so.
There are thousands of examples of double dippers including people in the military, educators and others who collect more than one paycheck at a time from the government. Is that wrong?
"I can't say that. I think you need to get the best person. The county is regularly hiring people from the city. That happens" said Tucson Mayor Jonathan Rothschild. He added, government has to offer competitive benefit packages to attract the best person for the job and if the best person is getting a pension check, he sees nothing wrong with that.
Traditionally, public workers have been paid less than private workers and pensions were a way to make up for that. But, according to the Bureau of Labor Statistics Arizona state workers are the highest paid on average at $44,745 per year. Private workers make on average, $42,860 per year and city workers make $41,742 per year.
How is this affecting Arizona's budget? Schlomach says, it's straining the system. He points to Arizona's Constitution which says that taxpayers must fund public pensions above anything else. So, when the state is out of money it cuts first from education, transplant patients, medicaid and kidscare, for example, not from pensions.
"It's all taxpayer. You're talking about any level of government, taxpayers are on the hook for all of it" said Schlomach.
In the wake of reforms passed last year with SB1609 future workers will have to contribute a little more and retire a little later among other changes. But that does not address current workers.
Some say that the reforms are not enough and and abuses will creep back in... and point to cases like that of David Boggs. After a whopping six years on the job he just retired as Chief of Valley Metro in Phoenix. Despite his short tenure, the state says his pension will pay him around $72,000 a year for the rest of his life. How did that happen? A spokesperson confirmed to KGUN 9 that when Maricopa County hired him, it agreed to pay $650,000 in taxpayer dollars so that he could buy into the pension plan. Valley Metro points out that the money was designated for administrative costs.
"If most taxpayers knew what was going on and realized that someone could retire with full benefits at 51, I think most people would say "I don't think that's right. Why should that be a privilege for people who work in government?" said Schlomach. He points out that one thing working against reform is the fact that lawmakers also receive a public pension and their pension system is in the worst shape of all.
A union representing Arizona Firefighters says, "A pension earned is someone's property. If they want to collect a pension check they have the right to get another government job somewhere else."
A union representing Correctional Officers tells KGUN 9 "We don't believe in "double dipping" but, if one did return to government work after retiring they should only be allowed to receive their paycheck they earn. Basically freeze their pension until they leave state service."
For more information go to kgun9.com