Green Valley Fire District Green Valley Fire District

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GVFD on hook for $530,000 for retiree pay

By Kim Smith –  ksmith@gvnews.com

Green Valley Fire District is figuring out how to come up with $530,000 to cover recent changes to the state’s public safety retirement system.

Chief Chuck Wunder said the district is uncertain where it will find the money, but “we’re looking at all possibilities, including the need for a tax increase.”

Voters approved Proposition 124 and the state Senate passed SB-1428  last year to get the financially troubled system back on track.  Ultimately GVFD will be required to contribute just over 11 percent more per year starting in Fiscal Year 2017-18, or an additional $530,000 the first year.

The changes also mean public safety organizations’ matching contribution rates are lower because employees hired after July 1 can choose a pension plan or a defined contribution plan, similar to a 401K.  In addition, permanent benefit increases are being replaced by cost of living adjustments, which will be capped at 2 percent, ensuring future retirees will have money to draw from.

However, the state pension system also lowered its assumed investment rate of return for the plan, requiring more money be paid in now.

“in the long term, I think we’re on the right track now, but in the short term it’s going to hurt,” Wunder said.

He said GVFD is in better shape than many of the other 150-plus districts in the state.  Not only has GVFD been fiscally conservative with a cash reserve on hand, it also can increase its tax rate because it hasn’t hit the cap of $3.25 per $100 of assessed value.  Many fire districts are already at the cap, he said, GVFD is a $2.38.

But that’s not the only financial challenge for the district.  Wunder said taxpayers also could be on the hook to reimburse 38 firefighters up to $10,000 each pending the outcome of a lawsuit before the state Supreme Court.

In an earlier attempt to save the retirement system and the Elected Officials Retirement Plan, a bill was passed in 2011 requiring plan participants to contribute 11.65 percent or 13 percent of their pay to their plan instead of the original rate of 7.65 percent.

Two judges sued, and last fall the state Supreme Court ruled that the bill violated the state Constitution and elected officials were due a reimbursement.  An identical lawsuit was filed on behalf of public safety employees and officials believe the Supreme Court will again rule in favor of employees, Wunder said.

The ruling would only impact those hired before 2012, but it’s unknown when it will come and how those reimbursements will be paid, Wunder said.  Until a ruling is made, employees are continuing to contribute 11.65 percent of their pay.

 

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