Proposition 125 would allow adjustments to 2 state pension plans
This week, KTAR News 92.3 FM will highlight the five ballot initiatives that will be on the Arizona ballot for the midterm elections next month. On Monday, KTAR News’ Bob McClay will break down Proposition 125.
PHOENIX — Proposition 125 would amend the Arizona Constitution to allow for two state pension plans to be adjusted.
Based on Senate Bill 1442 and 2545, Prop. 125 would make an exception to the current prohibition against diminishing or impairing public retirement system benefits.
Both elected officials’ and corrections officers’ retirement plans would be adjusted to remove a four percent benefit increase and replace it with a maximum of two percent cost of living increase.
Public Safety Personnel Retirement System vice chairman Will Buividas supports the notion, saying the adjustment will help spread out payments long term.
“We believe that it will ensure that the funds will be sustainable going into the future. After we did it for PSPRS two years ago, PSPRS is back to the path of recovery,” Buividas told KTAR News 92.3 FM. “It is stable, it is growing and we need to do the same to CORP and EORP so we can pay those pensions out to retirees for the next 50 years.”
A proposition that focused on police officers’ and firefighters’ retirement plans, Prop 124, did the exact same thing in terms of PBI and COLA and passed with overwhelming support, Buividas added.
PSPRS found that Prop 124 long term will end up saving employers about $500 million over the course of 20 years.
While Prop 125 is on a smaller scale, Buividas believes there will still be significant savings for taxpayers of upwards of $275 million over the next several decades.
“It puts both plans on the path of sustainability. It makes it a more stable plan, stable benefit that the employers can budget for, but also the retirees can budget for,” Buividas said. “It creates a fair playing field and puts us on the path to sustainability.”
By passing the proposition, it will be easier for employers to plan more as well as the PSPRS staff and investment groups.
“For taxpayers it frees up hundreds of millions of dollars to your local governments, cities and counties and then can be used on other critical services for public safety, for streets, for transportation and to provide needs for the community,” Buividas said of how Prop 125 will help taxpayers moving forward.
On the other side, opponents of Prop 125, like retired corrections officer Eric Hahn, feel the proposition is taking money out of the pockets of retirees.
“It’s basically just changing a contract after everybody’s already retired that’s why we’re against it,” Hahn said. “We fulfilled out terms of employment and retired and now the state’s coming back and trying to cut out costs of living for retirees and make retirees their scapegoat for their budget problems.”
The proposition would essentially take a cut out of the retirement pay from a cost of living standpoint, Hahn added.
“I know that judges and corrections officers would not be able to receive their full promised cost of living increase,” Hahn. “I believe it would take it down to two percent for current retirees, which is just not fair.”