Arizona pensions for elected officials may be cut

State lawmaker seeks to revamp Elected Officials Retirement Plan
2013-02-15T00:00:00Z 2013-02-15T18:33:06Z Arizona pensions for elected officials may be cutHoward Fischer Capitol Media Services Arizona Daily Star
February 15, 2013 12:00 am  • 

PHOENIX - The lucrative pensions taxpayers now provide state and local elected officials could soon be on the way out.

House Speaker Andy Tobin, R-Paulden, is pushing a proposal to vastly revise the Elected Officials Retirement Plan, which now allows everyone from local officials to legislators and the governor to retire after 20 years at 80 percent of their highest pay - nearly double the benefit offered to most other public employees in the Arizona State Retirement System.

But that's only half the story.

Until last year, the plan legislators set up for themselves and fellow public officials based their pensions not on the average of what they've earned during their entire career, but an average of what they made in the last three years.

What that means is a person could serve 16 years in the Legislature at $24,000 a year and then run for a single four-year term on the Arizona Corporation Commission, where the salary is $79,500, which puts the pension payments at $63,600.

It happens regularly. Virtually all of the commissioners elected in the last two decades have been former lawmakers.

Many other legislators end their careers as county supervisors, where the salary is $67,800 for Pima and Maricopa counties and $56,500 elsewhere.

The 80 percent retirement after 20 years doesn't include annual cost-of-living increases, which eventually could push the retirement pay above what the official was making when actually working.

Consider Jane Hull. She served as governor from 1997 through 2002 and never made more than $95,000. But counting her time as a state legislator entitled her to 80 percent, and increases since she left office have boosted her annual pension to more than $100,000 a year.

Tobin's proposal, being carried by Rep. Phil Lovas, R-Peoria, would convert the elected official pension from a "defined-benefit" plan, with payments guaranteed at a certain level based on years of service and salary, to a "defined-contribution" plan.

That is closer to a typical 401(k) program that has become a business standard, with the employer contributing a set amount - usually matched by the worker - and each worker's pension ultimately determined by how well the investment has done.

Nothing in the legislation will affect anyone already in office, as the Arizona Constitution precludes tinkering with the rights of anyone in a public retirement plan. But it would affect anyone not in office as of July 1.

It also would affect judges, who are in the same plan. The Arizona Judges Association is not supportive.

Tobin said all four of the state pension systems need to be revamped. He said, though, it's only fair for lawmakers to start with the one that affects them.

He also said the plan for elected officials is the most "underfunded" of the plans when looking at its current assets compared to future liabilities.

Tobin said lawmakers have tried to rein in the fund's liability in the past by putting limits on cost-of-living increases for retirees and requiring those still working to contribute more.

That, he said, only resulted in lawsuits by active and retired judges who complained it violates their rights. So far the rulings have gone in favor of the judges.

This legislation avoids that problem by making the changes apply only to those who are not now in the system.

Pete Dunn, lobbyist for the Arizona Judges Association, said his client understands the desire to revamp the system. But he complained the proposal maintains "a very good plan" for current judges and elected officials, while hitting new office-holders with "the worst pension plan in the state."

He said any new plan should be at least on par with the state retirement plan.

That plan also allows workers to eventually get a pension worth 80 percent of their highest pay, but it takes at least 35 years to get to that point, not the 20 years in the one for lawmakers and judges.

Dunn said the proposed plan will virtually guarantee smaller benefits, which will result in fewer attorneys willing to give up their practice to become judges, eroding the quality of the judiciary.

On StarNet: Read more about local and state government and political news at azstarnet.com/politics

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Activate

Follow the Arizona Daily Star

Deals, offers & events

View more...

Lemonade Days of Summer Smoothies!

Flavors: The Pucker, The Squeeze, and The Crunch - for a limit…

Event Calendar

Today's events | Add an event

Most viewed:


Get weekly ads via e-mail