PHOENIX — Arizona voters approved Proposition 124 in a special election on Tuesday, a measure that overhauls the state’s pension system for police officers and firefighters, an official said.
“Tonight’s landslide vote passing Proposition 124 puts this system back on the path to full funding,” Bryan Jeffries, head of the Yes no 124 Campaign said in an email.
Unofficial results on Secretary of State Michele Reagan’s website showed Prop. 124 leading by more than 350,000 votes about 11 p.m. Tuesday.
Prop. 124 includes lower cost-of-living increases for current and future retirees and was designed to help the retirement system for public safety officers recover from a major drop in the plan’s funded status.
The current system doesn’t allow reductions in permanent benefit increases.
Poor investment returns are also part of the problem. Anticipated returns on funds the Public Safety Personnel Retirement System held were around 7 or 8 percent. The funds for the pension system have returned 5 percent between 2002 and 2016.
The funding level has sunk to just 50 percent of its expected liabilities while employers have seen their contribution rates soar to an average of more than 42 percent of an employee’s salary.
The larger overhaul of the pension system establishes a new tier for newly hired officers, limiting maximum pension payments and equalizing employer and employee contribution rates.
KTAR’s Kathy Cline and the Associated Press contributed to this report.
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