Arizona’s Gubernatorial Candidates Both Vow To Address Pension Woes, But Specifics Hard To Come By

Both of Arizona’s gubernatorial candidates (Republican Doug Ducey and Democrat Fred DuVal) have said they will try to find a solution to the funding problems plaguing the Arizona Public Safety Personnel Retirement System (PSPRS). The system is only 49 percent funded.

But neither candidate offered much in the way of specifics during interviews with the Arizona Republic’s editorial board. From the Arizona Republic:

Neither Republican Doug Ducey nor Democrat Fred DuVal, during interviews with The Arizona Republic, offered specific plans to fix the troubled Public Safety Personnel Retirement System. 

Both said they would try to develop a consensus among employees, employers and lawmakers to find a solution for the $7.78 billion unfunded liability that has put a crimp on local communities’ ability to hire police officers and firefighters.

DuVal and Ducey say working with all groups involved in the pension systems is the only way to avoid litigation, which thwarted pension reforms the 2011 Legislature enacted.


DuVal said PSPRS is financially unsustainable, but court rulings have made it clear that state constitutional changes, which would require voter approval, may be needed for reform.

“We want to approach this in a way that has long-term solutions,” DuVal said. “We need to make sure everyone is involved. We are looking at broad participation to avoid litigation.”

Ducey said basically the same thing.

“The biggest concern is to look at the unfunded liabilities,” Ducey said. “There are a number of reforms, and lot of different options. I want to talk to leaders of all the organizations.”

He also said he would embrace recommendations by a pension-reform task force he led as state treasurer, including limiting retirement benefits to base-salary compensation. That proposal would prevent using lump-sum payouts of vacation and sick time and prevent the artificial inflation, or “spiking,” of pensions.

The Arizona PSPRS saw its funding ratio drop dramatically over the course of fiscal year 2013-14 – from 58.7 percent to 49.2 percent. It isn’t the only Arizona retirement system in trouble. From the Arizona Republic:

The funding ratio for the Corrections Officer Retirement Plan dropped from 69.7 percent to 57.3 percent, and there are $1.1 billion in unfunded liabilities. The average pension is $26,299.

The funding ratio for the Elected Officials’ Retirement Plan dropped from 56.5 percent to 39.4 percent and there is a $482 million unfunded liability. The average pension is $50,338.


The plan for elected officials, which includes judges, is in the worst shape. It has less than 40 percent of the money it needs to pay for current and future pension obligations. The fund may run out of money in 20 years if no significant changes are made. That plan is closed to newly elected politicians, and is expected to eventually cease, but additional public funds may be needed.

PSPRS is shouldering $7.78 billion of unfunded liabilities. Since 2010, it has reduced its assumed rate of return from 8.5 percent to 7.8 percent.

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