We’ve written before about John Arnold, the former Enron energy trader turned hedge fund billionaire, who has made it his mission to gut public pensions across the nation. We’ve also highlighted one of his notable failures: his single-handed attempt to undermine public pensions in Phoenix, Arizona. While Arnold’s measure was rejected by the sensible voters of Phoenix, we think it’s worthwhile to tell the whole story.
Proposition 487, which appeared on the ballot in November 2014, was a measure that would have frozen Phoenix’s defined benefit pension plan and created a new, defined contribution, 401(k)-style system for new employees. The group backing Prop 487, called Citizens for Phoenix Pension Reform, received over $1 million, almost all of their money, from John Arnold. As Phoenix firefighter Brian Tobin said at the time: “This is not a citizens’ initiative; this is a dark money initiative where very rich people that we don’t know who they are and we probably never will contribute to an organization.”
Fortunately, the voters in Phoenix recognized the harm this proposition would do to the retirement security of their firefighters, teachers, and other public workers. As has been well documented in research, closing a defined benefit pension plan dramatically increases costs and weakens retirement security for workers. Former city council member Tom Simplot said it best: “It’s the wrong proposition achieving the wrong result and truly hurts working families.”
Prop 487 was soundly defeated 56% to 44%, a victory for working families in Phoenix.