The Latest News On Pension Reform Efforts
On the PFFA pension reform front, we are still working the Legislature to bring our proposals forward. For a basic overview of the pension situation you may view the video on our website.
An important development happened last week on the legal side of our pension plan. We have been working on a solution to our pension-funding situation because it appears that most – if not all of SB 1609 – will be overturned. The outcome of the Fields case, one of the most significant pieces of litigation in relationship to our pension fight, will likely drop the funding ratio of PSPRS below 50 percent.
On January 27, 2015, the Arizona Superior Court entered a final judgment in the Hall case. The effect of that case? To declare that anything in SB 1609 purporting to change the pension rights that active members had, prior to the effective date of SB 1609, were void and of no effect. The court’s judgment essentially restored to the status quo, the PSPRS rights of all active members who were employed prior to July 20, 2011 (SB 1609’s effective date). In addition, it invalidated SB 1609 as it pertained to such PSPRS members.
Among those provisions of SB 1609 that the court threw out were the increase in a member’s contribution rates and the purported changes to the formula used to grant permanent increases in base benefits (commonly referred to as the “COLA.”)
Not only did the court invalidate SB 1609 as it pertained to our active members, but it also enjoined PSPRS and the State of Arizona from applying SB 1609 to our active members. Plus, it ordered them to restore the reserve for such permanent benefit increases as if SB 1609 had never been enacted.
The court’s judgment in Hall is a sweeping declaration that SB 1609 is unconstitutional as applied to all active judges, and because of the stipulation we entered into, it is also a sweeping declaration that SB 1609 is unconstitutional as applied to all active fire fighters who were members of the system prior to July 20, 2011.
In the court’s minute entry, the judge said he was going to let the Retirement System have some latitude to take appropriate administrative steps to “fix” this, e.g., restore the reserve account, change their practices, etc., but the judgment itself restores the status quo. Basically, SB 1609 cannot retroactively change any formulas, any contribution rates, or any COLA’s, for officers who were members of the system prior to July 20, 2011.
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