Arizona Lawmakers Close In On Public Safety Pension Changes

640px-Entering_Arizona_on_I-10_Westbound

Arizona lawmakers are nearing a deal to bring changes to the state’s Public Safety Personnel Retirement System.

Cities have become unhappy with rising pension costs; the average Arizona city contributes 42 percent of its police and firefighters’ salary to the Public Safety pension system.

Among the changes currently being discussed: capping COLAs, increasing the pension eligibility age, and increasing employee contribution rates.

From the Houston Chronicle:

State Sen. Debbie Lesko, R-Peoria, has been spearheading talks with police and fire unions on an overhaul.

[…]

Lesko said last week that she believes a plan can be ready for the upcoming legislative session.

“The good news is I’m very confident, although I can’t say 100 percent, I’m really thinking we’re going to get something done,” she said at the Arizona Tax Research Association’s outlook conference.

The plan includes a firefighter’s proposal to change yearly benefit increases that are sapping the trust fund. The change would require voter approval. The way the plan is now structured, excess earnings from the pension trust are put into a fund that doles out automatic increases in most years. The problem is that when the fund sees losses, as it did during the Great Recession, excess cash in flush years can’t make up the difference because it is sent to the cost-of-living-adjustment fund. The firefighter’s proposal would end that practice.

Other changes include proposals to increase the pension eligibility age, equalize employer-employee contribution rates and a cap on earnings that are used to calculate pensions. That would address problems with so-called “pension spiking” where employees cash in vacation time, sick days and other accrued time to increase earnings in the final years of service and boost their pensions forever.

The Arizona Public Safety Personnel Retirement System is about 50 percent funded.

 

Photo credit: “Entering Arizona on I-10 Westbound” by Wing-Chi Poon – Own work. Licensed under CC BY-SA 2.5 via Wikimedia Commons

Share This Post

Recent Articles

One Response to “Arizona Lawmakers Close In On Public Safety Pension Changes”

  1. Andrew Szakmary says:

    Arizona, like Illinois and New York, has very strict constitutional language preventing any changes that would result in diminished pensions for current employees and retirees. Unless this legislation is restricted to new employees, it is virtually certain to be invalidated by the courts. It is a complete waste of time and will accomplish nothing.

Leave a Reply

Privacy Policy | © 2017 Pension360 and © 2014 Policy Data Institute | Site Admin · Entries RSS ·