Phoenix, AZ – Since it was formed four decades ago, the cost of funding the Arizona State Retirement System has been shared equally by workers and employers. But to balance the budget this year, the Legislature altered that formula so employees now pay 53 percent. The move generates $41 million a year, with the annual difference to the average worker about $255. Arizona Education Association Andrew Morrill President said that is illegal. He pointed to a provision in the state constitution which says membership in a public retirement system is a contractual relationship and the benefits cannot be diminished.
(When you alter the contribution and suddenly you're paying more as opposed to the employer, what was the matching 50-50 is now 53-47, what you're really doing is reducing the benefit because you're having to pay more to get the same benefit. You're reducing the net benefit that participant is going to get.)
The lawsuit asks a Maricopa County Superior Court judge to declare the change illegal. Sheri Van Horsen, president of Local 3111 of the American Federation of State, County and Municipal Employees said the state could have avoided the lawsuit had it applied the change only to new workers. But that would not have generated anywhere near the same amount of money. Daniel Scarpinato, spokesman for House Speaker Andy Tobin, defended the move.
(The Legislature has had to make some very difficult decision given the seriousness of our budget crisis. And this was one of those. And we're confident it will be upheld in the context of what the state has had to face.)
No date has been set for a hearing. For Arizona Public Radio this is Howard Fischer.