Phoenix Mayor Greg Stanton will talk about issues regarding the city in his monthly appearance on Arizona Horizon, including his recent trip to China to meet with leaders of 1,600 leading global companies.
Ted Simons: Good evening and welcome to "Arizona Horizon." I'm Ted Simons. The issues of pension fairness in general and pension spiking particular are both front and center at Phoenix city hall. Phoenix Mayor Greg Stanton joins to us discuss those and other city concerns. Good to see you again.
Greg Stanton: Good to see you. Happy to be here.
Ted Simons: Let's define terms. What is pension spiking?
Greg Stanton: That's exactly what we have an ad hoc committee doing. This is a very complicated issue. Nobody likes the idea of pension spiking but getting to a legal definition, what within our compensation is spiking, what isn't spiking. A lot of policies have been in place for two decades or more. So we're going to go back and relook at some of our policies, what is fair moving forward. How can we be most transparent? We did pass pension reform last March. It's going to save the city a lot of money. We eliminated some pension spiking through union contracts. We're in litigation over that now. When that case comes to a decision we'll have more of the contours of what we can do and can't do. A lot of it has to do with what you can do moving forward for new employees prospectively versus retrospectively. Usually when you do anything retrospectively the plaintiffs have been successful in that litigation. We don't know what's going to happen in ours, but that's ongoing right now. We're making some recommendations moving forward making sure we're following the law and also what's the right thing to do.
Ted Simons: In general terms, unused sick and vacation time counted towards your pension payout. The idea is it inflates your end-of-career compensation. A general definition of pension spiking.
Greg Stanton: Your pension is determined by an average of your last three years. Anything that would sort of artificially inflate those last few years is what we're looking at. My goal and I think the goal of the majority of the council is not to drive down compensation in the city. We want to make sure we are compensating our employees. We have outstanding employees in the city of Phoenix, very talented people. There's a reason why we have maintained a Triple-A credit rating, even through the economic downturn. We are a well-run city; we're not a perfect city, but we are a well-run city. The goal is not to drive down compensation. The goal is to be as transparent and fair as possible. Some of the practices again have been in place for multiple decades. I think most people including myself have said, look, we need to change those policies so it's more transparent so the public knows what the pension is based upon.
Ted Simons: Taking information from the Arizona Republic, they've done a lot of reporting on this, they are leading the charge on this, "spiking is allowed for some workers, not others." True?
Greg Stanton: Sure. Just like I would say that there have been different pay scales for different workers. We have five different labor groups that we negotiate contracts with in the city. We don't have a uniform contract. We contract individually with those various organizations. We vote on it by council. Just like, by the way, we voted on the city manager's contract by - vote for the current city manager's contract. We voted to kinds of keep the current policies in place. I think myself and others have said when we hire a new city manager and we're among all the other issues we're dealing with, we're in the process of hiring a new city manager we said we're going to eliminate pension spiking in any future city manager contract because leadership starts at the top. To an extent there have been differences in that system, and part of this ad hoc committee is to come to uniform definitions as to what is pension spiking so that as we adopt the policy we can be fair to everyone across the board.
Ted Simons: The fairness issue comes up again. The idea of the city council fighting the rank-and-file from pension spiking, there are reports that executive upper level management the fight isn't quite so strong against them and their pension spiking. Is that fair?
Greg Stanton: As it results -- the issue of the city manager, some of the things we discovered recently regarding the city manager's contract-- I think that is a fair criticism. Exactly why we said immediately that for the new city manager contract we're going to make sure we eliminate any pension spiking. The whole point of the current ad hoc committee, they have one month to make their recommendations, is to make the system as fair and transparent across the board. Let me reiterate. We have outstanding employees in the city of Phoenix. We have to make sure we compensate them fairly so we can attract and retain the very best people. We are an important entity in this organization. We don't want to pay people such a low amount that we don't attract high-quality people, but we want to do it in the most fair, transparent way. That's the reason why we're going through this important process of eliminating pension spiking. If you were to say you've treated this group one way, this group differently, this is exactly why we're going through the ad hoc process. The committee right now chaired by vice-mayor Bill Gates, a fair, even-handed, really intelligent member of my council leading this committee. We're going to lay the foundation for uniform recommendation on pension spiking and that's the whole reason why we're doing this.
Ted Simons: So it has happened. You and others say it's not necessarily fair as it exists. Time to change. Still and all, how does the city manager wind up with I think the Republican worked it out to over $2,000 per year pension and then the next day takes a job somewhere else. I mean, I understand the changes. Sounds like they were needed. How did it get to that point to begin with? Was anyone not watching that particular store?
Greg Stanton: Well, here's the deal. We want to make sure that our city manager - by the way, just like we want to make sure for our employees up and down the line are paid a competitive compensation package. So we knew it was controversial when we gave a salary increase to our city manager but if you look at other city managers for cities our size we're still at the relatively low end of that scale. At the end of the day, the city manager, you pay your city manager what he or she is worth. You want to have a compensation system that allows you to be competitive in case your city manager leaves or retires so you have a pay scale that is fair. We want to be a most competitive city so people want to stay. I wish Mr. Cavazos nothing but the best in his next position. I want to hire a city manager as we're going through the process now that stays well beyond my two terms as mayor and probably well beyond the terms of the existing council members. You want to get someone that will stay for the long haul. You can only do that if you have a great system under which to operate and a competitive compensation system.
Ted Simons: And yet, one more point, It can be argued that you got the guy the raise, the humongous raise in tough times and through criticism. Only one negative vote there on city council.
Greg Stanton: It was 8-1.
Ted Simons: You got him the raise, he's gone anyway. That doesn't necessarily guarantee -- again, arguing from the other store, it doesn't guarantee they are going to stick around.
Greg Stanton: Let me tell you something right now. The police chief could resign tomorrow and leave for another job. The head of our public works department, head of our parks department. You want to make sure you have an overall competitive compensation system. You don't want to pay too much or too little. You want a competitive compensation system, and you want to have a work environment they want to stay in. We're running a very important organization in this very large, important organization, but we don't have a system where you have tell people you have to stay forever. You have the ability to leave. Mr. Cavazos, I wish him nothing but the best in the next position. As mayor, I'm looking forward to the next city manager as well as how to lead the city forward so we can be one of the leading economic cities in the world. That's what I'm going to continue to focus on as mayor.
Ted Simons: How is that process going?
Greg Stanton: For the city manager search or -- the city council made a decision the assistant city manager, an outstanding professional, will be the acting city manager. In the meantime we're going to do a national search. It's important that a city of our size and importance in this country do a national search for our city manager. We want to make sure we get the best and brightest people. We also give full and fair opportunity for our most talented people within our organization that they have the opportunity to compete with that job. We have top talent within the city we think can compete nationally but it would be inappropriate not to engage our national search. We're just beginning that national search process. We should check in regularly. I can give you updates on the process.
Ted Simons: fair enough. Last question on pension spiking. How much is it impacting the retirement systems? If it's a 42% increase from three years ago, what's the obligation there, we have one council member saying we're heading to becoming the next Detroit if we don't change things around. What's going on?
Greg Stanton: Phoenix is a very well managed city. We're the only big city of the top ten, only big city with a Triple-A credit rating.
Ted Simons: Are we going to keep it?
Greg Stanton: We have gone through a recent evaluation of transit dollars and were recently reevaluated by Moody's who gave us a Triple-A once again. We're not perfect. We face challenges like every other big city, but people who engage in hyperbole to make a political point, that's inappropriate. We needed to ensure our employees paid more into the pension system. That's why we put pension reform on the ballot. Guess what. Despite the opposition of the council member you're referencing it passed with an 80% vote of the people which is going to put hundreds of millions of additional dollars into the pension system. The whole point was to make sure that we did all we can to support the pension system and keep it there for the long run. It was a more fair system. If we decided to keep the city employees in a pension system it was important they pay more into that system to receive that pension. That's exactly what pension reform was all about. It's exactly why we did it and the voters overwhelmingly supported the reforms we made to our pension system.
Ted Simons: We'll find out what that council member committee does shortly.
Greg Stanton: In one month. Next time I'm back.
Ted Simons: Some say one month ties long but that will have to do, correct?
Greg Stanton: Actually to make the tough decisions both from deciding what the right thing to do as well as the legal constraints in which we operate, one month was appropriate.
Ted Simons: We have to talk about your trip to China. What was that all about?
Greg Stanton: I was lucky enough to be invited to the World Economic Forum, a meeting in Dalian, China. Dalian is kind of a resort city in China, near the North Korean border, a very small city of 6 million people, which would make it about the third-biggest city in the United States of America. It was a very exclusive group. I was able to have meetings with CEOs of some of the major Fortune 500 multi-national corporations including many that have operations here in Phoenix. I had a chance to talk to the key decision makers within those organizations make the case as to why additional investment in Phoenix is important. I did also have a chance to serve on a panel discussion of urban leaders around the world including leaders from Beijing and Shanghai and Tokyo. I was bragging about how Phoenix is the fifth or sixth biggest city in the United States of America with 1.5 million people. The urban planner from Beijing said that would barely put you in the top 100 in China. A humbling realization that on population we have a long way to go. Our economic relationship with China and the Asian world is critically important moving forward and Phoenix has to create an international identity so people know the value of investment in our city.
Ted Simons: good enough. We got about seconds left. Do you think -- going back to pension spiking, do you think the message is getting through and the confidence is there among citizens that this will be handled correctly? Right now it sounds like a big old mess.
Greg Stanton: Well, look, people suggested that pension reform would never occur. We did pension reform. Yes, we're hearing from the public as we should. More importantly we're trying to figure out the right thing to do. My leadership style is always going to be to move forward with what I believe is the right thing for the future of our city and let the political chips fall where they may. Again, we have outstanding employees at the city. The idea is not to drive down compensation but have a more fair, transparent system. We're going to get there. Check with me in a month.
Ted Simons: All right, we will do that. Mayor, good to see you.
Greg Stanton: Thank you.
Greg Stanton:Mayor, Phoenix;