Arizona House OKs bill on public workers' pensions
PHOENIX (AP) - The Arizona House on Thursday approved a Republican bill to change Arizona's public employee retirement systems by scaling back some benefits, mostly for new hires, and requiring new contributions from employers rehiring retirees.
House passage on a 36-20 vote that mostly tracked party lines returned the bill to the Senate for a final vote that would take place next week.
Legislative District 1 Reps. Andy Tobin and Karen Fann, and Legislative District 4 Reps. Judy Burges and Jack Harper all voted in favor of the bill.
The bill represents a compromise between competing proposals by House Speaker Kirk Adams, R-Mesa, and Senate Finance Committee Chairman Steve Yarbrough, R-Chandler, respectively.
Adams said the changes are needed to bolster the financial footings for the four pension systems serving the state and local governments and their workers.
"The health of these systems should be our primary focus," Adams said. "We have a constitutional duty to be good stewards."
Some current provisions are toned down in the current legislation from those originally proposed, but Democratic representatives said the bill still went too far in restricting benefits.
"We are doing harm to the people that take care of us," said Rep. Lynne Pancrazi, D-Yuma.
The legislation is motivated at least partly by "national sentiment to punish the working man and the working woman," said Rep. Ruben Gallego, D-Phoenix. "Everything needs tinkering once in a while. I just don't see the barn burning down."
Changes that would apply to one or more of the four state retirement systems include tying cost of living adjustments to measurements of plans' financial health and requiring pension-system contributions from employers who hire retirees returning to work while still drawing benefits. There also would be new restrictions on supplemental lump-sum payments to police officers who delay retiring.
Changes applying only to new members include higher age and service limits for retirement, with no early retirement option under the plan that serves elected officials and judges.
Also, there would be a study on additional changes, including whether the state should replace its defined-benefit pension in favor of systems based on defined contributions.
Public employee unions opposed the bill. Business groups and the League of Arizona Cities and Towns supported it, with the municipalities group saying it contains "meaningful and necessary" changes to shore up the retirement plans.
Saying that the legislation was carefully negotiated with Yarbrough, Gov. Jan Brewer's office and others, Adams on Thursday fended off various proposed amendments, including some offered by fellow Republicans and others by Democrats.
Many of the changes would affect only new hires because the Arizona Constitution treats retirement plans as contracts that "shall not be diminished or impaired."
"We are not taking away people's benefits," Adams said. "The vast majority of the changes in this bill are prospective and the changes that affect active members are for the benefit of their own retirement so they can count on it when they retire."
Lawmakers acknowledged that the vote was politically sensitive because it involved public safety workers and teachers in their districts.
The House's extended debate on the bill touched nerves when Gallego said the bill was motivated by Republicans' desire to notch "political points."
House Majority Leader Andy Tobin objected with "respectful disgust."
Arizona is not alone in making changes to its public employee retirement systems.
Retirement programs for state and local government employees have been under a spotlight nationally by lawmakers and others due to the programs' rising costs and poor investment performances during the Great Recession.
However, the National Conference of State Legislatures, the National League of Cities and other government groups said in March that most public pension programs were not in crisis and that under-funded ones were taking steps to strengthen themselves.
Approximately 255,000 public employees belong to the state's four retirement systems, which pay benefits to approximately 111,000 retirees.
Most state and local government employees, including schoolteachers, belong to the largest plan, the Arizona State Retirement System. There are smaller plans for public safety employees, corrections officers and elected officials, including judges.