As most people know, Arizona soon will have a new Governor, a new Attorney General and a new State Treasurer, not to mention several new members of the state Legislature. There’s no doubt that all of them have a lot on their plate as they make the transition from candidates to public officials.
But there’s one thing they should all have near the top of their priority list as they prepare to take office come January–getting Arizona’s $7.8 billion public safety pension system under some semblance of control.
If you’ve been distracted by the election and haven’t been paying attention to the what’s been going on over at the Public Safety Personnel Retirement System, here’s what you missed.
Jim Hacking, the head of the PSPRS, was forced to resign this summer after it was discovered he secretly ordered raises of up to 27% despite not receiving approval from the Department of Administration (ADOA) – making the raises illegal. Doubling down on chutzpah, he then asked ADOA for those same raises, even though he had secretly already given them. The PSPRS board decided to let Mr. Hacking retire rather than fire him for cause, so he could cash a $107,000 severance and begin receiving an $87,000 annual pension.
Not long after, the Arizona Attorney General cracked down on PSPRS for spending $1.76 million in legal bills last year alone for an outside law firm, despite the fact the pension fund is already represented by the Attorney General’s office for legal matters. One of the many functions of Kutak Rock, the law firm in question, was to advise on how to slow-walk public records requests – like the ones filed by the Arizona Republic regarding the aforementioned illegal pay raises.
As I write this, the PSPRS is under state investigation for suspected sexual harassment of an employee and is under an FBI investigation for allegedly inflating the value of real estate investments in order to push higher employee bonuses. That investigation was triggered by four whistle-blowers, who are now being sued for openly questioning how PSPRS was valuing land trusts, which has lost tens of millions. The legal tab for their defense is being paid by taxpayers.
As the Arizona Republic rightly described it, the PSPRS is an unholy mess, and it’s long past time for reform. Unfortunately, common sense proposals like HB 2060, introduced by Sen. Kavanaugh, went down to defeat this past session thanks to relentless pressure from unions and PSPRS lobbyists. Reforms like ending no-bid contracts and reigning in illegal employee bonuses should have passed unanimously instead of being shot down in the House.
One can only hope the new Governor and Legislature will look at tackling this problem next year. Otherwise, reckless mismanagement of a pension system already on the brink of not being able to fulfill its payment obligations will only get worse.