The Daily Iowan | Public pension plans face scrutiny

Findings from TUA’s pension project on Iowa are featured in this article at The Daily Iowan.

BY ASMAA ELKEURTI | JANUARY 23, 2012 7:20 AM

The advocacy group Taxpayers United of America is calling for pension reform across Iowa.

Officials from the anti-tax group said million-dollar pension payout plans need to be seriously evaluated by state legislators and reformed, a concern some Iowa City city officials share. Officials with the advocacy group visited cities throughout Iowa last week to push for pension reform.

But Iowa City City Councilor Connie Champion said she doesn’t see change happening soon.

“It definitely needs to be looked at, but I don’t see when that’s going to happen,” she said. “I really don’t.”

Iowa City will spend $2.2 million on city employee pensions in fiscal 2012, a 57 percent increase over the $1.4 million paid in 2010. Iowa City Finance Director Kevin O’Malley has previously told The Daily Iowan that number is only expected to rise.

According to Taxpayers United of America, Iowa City Police Chief Sam Hargadine will receive the highest pension payout, with more than $3.7 million for public safety employee pensions, which are different than general public employee pensions.

Recently retired Iowa City Assistant City Manager Dale Helling will receive almost $3 million in pension payouts.

Christina Tobin, the vice president of Taxpayers United of America said she feels in order to save the system, changes must be made.

“We are proposing reform for pensions nationwide,” she said. “We feel that if there isn’t reform, the system will collapse, and there will be no pensions.”

But the issue isn’t getting the right kind of attention, Champion said.

“The only people I know who are interested are those who are paying the bills,” she said.

Individual cities are billed if the state cannot fund pensions, ultimately shifting the costs onto taxpayers.

Champion said she feels legislators aren’t taking the issue into full consideration due to conflicts of interest.

“These pension funds were set up at a time when public employees did not have very good pension plans,” she said. “… It’s going to be very difficult to change. Part of the problem is our legislators are part of the same pension plan, so it’s hard to get them to do anything about that.”

Rep. Dave Jacoby, D-Coralville, said he feels the current pension system is fine the way it is.

“The current system works, but we’ll have to keep an eye on it to ensure the current system remains solid,” he said.

Iowa City Fire Chief Andrew Rocca previously told the DI reducing pensions for public-safety employees may affect the quality of applicants at the entry level.

“From my perspective, the pension is probably a very powerful recruiting tool,” he said. “People who look into a public-safety career look at the package. If it were to erode too much, it may affect the quality of the candidates we see at the entry level.”

Champion said these pension plans should be comparable with private sector retirement benefits.

“I don’t want to take pension plans away for people,” she said. “I just want to see it be more competitive with the private sector. 401K would be great with that. This is not just the problem in Iowa City or Iowa. Nobody has the perfect solution. Nobody even knows what the perfect solution is, but it will be talked about for a long time.”

Rather than changing pensions, Jacoby suggested reforming private sector wage discrepancies.

“I’m afraid right now you’re seeing enormous profits on one hand and suppressed living salaries on the other,” he said. “Instead of complaining about the public sector, we need to make sure the private sector is climbing up, not try to make the public sector climb down.”

Tobin said Taxpayers United of America eventually hopes to work for pension change on a federal level.