Today (March 3), SB1609 passed out of the Senate with a 21-5 vote. All Republicans in the Senate voted for the bill. The bill now moves to the House and we will continue to seek a resolution to the issues within this bill as well as HB2726. Both pension bills, if passed as written, will have a significant impact on current employees and retirees. Under no circumstances can we support legislations that violations the Arizona Constitution and U.S. contract laws.
Earlier this afternoon, I attended a meeting of the joint police groups committee. During this meeting, and after discussions with legal counsel and group representatives, the group agreed to offer the following proposal to Senator Yarbrough in an attempt to fix SB1609:
1. The groups ask that a floor amendment be offered to SB 1609 removing the elimination/modification of the current Excess Earning Account (COLA) changes and the Employee Contribution Rate increase. We ask that these items be held in abeyance until more stakeholders meetings can be conducted through the summer and fall and further legal opinions can be gathered.
2. Adopt the latest APA proposal (stated below) for new tier employees.
3. No change to current COLA or Employee Contribution Rates pending further discussions over the summer and fall.
The police groups in attendance were the APA, AZCOPS, PPSLA, and Association of Retired Police Officers.
The latest proposal submitted by the Arizona Police Association (for a 2nd tier to PSPRS for new employees):
COLA: Guarantee a 2% COLA for current and future retirees. Allow for future increases to occur to a maximum of 4% under this formula and under these conditions:
1. When the fund’s investment earnings reach 11.5% for every ¾% increase thereafter, ¼% increase will be provided to retirees provided the fund has a actuarial value of 70%.
2. The Guaranteed 2% would only apply if the fund has investment earnings above 11.5%.
Employee Contribution Rate: Spread out the employee contribution rate over 6 years. 1 percent the first year, ½ percent the second year, to continue through year 6. (We know contribution rate increases in the future are a reality. We should dictate when they become effective.) During the increase employee contribution rate period (7 years) PSPRS would be required to place 1/4% of investment earnings over 12% into a “Mandatory Employer Rainy Day Fund” to only be used in adverse economic times to offset rising demands for increased contributions.
Stay tuned to the website for updates next week.