Last month at a Council meeting I voted against pay increases for our top city officials. Below is a chart showing pay increases for their respective positions over the last 20 years. The red line is the average for the citizens of Mesa. This chart compares the citizens of Mesa salary increases per capita to the four positions that the Council sets annually.
It is not sustainable to give our executives salary increases at this rate while the Citizens we represent are not seeing like pay increases in the economy. Further, if we can’t afford to pay the current pension liabilities how can we offer such drastic pay increases?
In addition to the unsustainability of executive pay increases year over year, there exists another massive problem. We have pension liabilities that are severely underfunded. As of last year, the Public Safety Personnel Retirement System or PSPRS for Mesa fire is only 50.5% funded and Mesa Police 46.99% funded. The retirement for the remaining City of Mesa employees in the Arizona State Retirement System or ASRS is only 70.5% funded.
ASRS Will Break in the Future
If you look at the breakdown of the asset classes you can see that ASRS is heavily invested in equities or the stock market. This means when the next stock market downturn comes ASRS will be in trouble. Typically retirement funds are diversified across multiple asset classes so they are immune to these market gyrations. The issue is they are so grossly underfunded they have no choice but to invest in risky assets in hopes that they meet their goal of a 100% funded ratio.
While PSPRS is severely underfunded you can see they have at least diversified. They did this after the board bankrupt PSPRS circa 2008.
At the end of the day, neither the ASRS or PSPRS retirement funds are healthy. If we can’t afford the retirement we’ve promised to employees without massive tax increases how can we possibly be handing out raises so far in excess of what our citizens are experiencing?