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Arizona Adjustments to Elected Officials’ Retirement Plan and Corrections Officer Retirement Plan Amendment (2018)

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    Posted on: June 12th, 2018

    Arizona Adjustments to Elected Officials’ Retirement Plan and Corrections Officer Retirement Plan Amendment
    Flag of Arizona.png
    Election date
    November 6, 2018
    Topic
    Pension
    Status
    On the ballot
    Type
    Constitutional amendment
    Origin
    State legislature

    The Arizona Adjustments to Elected Officials’ Retirement Plan and Corrections Officer Retirement Plan Amendment is on the ballot in Arizona as a legislatively referred constitutional amendment on November 6, 2018.[1]

    “yes” vote supports this amendment to make adjustments to retirement plans based on cost-of-living adjustments, rather than permanent benefit increases, for correctional officers, probation officers, and surveillance officers (Corrections Officer Retirement Plan) and elected officials (Elected Officials’ Retirement Plan).
    “no” vote opposes this amendment to make adjustments to retirement plans based on cost-of-living adjustments, rather than permanent benefit increases, for correctional officers, probation officers, and surveillance officers (Corrections Officer Retirement Plan) and elected officials (Elected Officials’ Retirement Plan).

    Overview

    The measure would allow the Arizona State Legislature to make adjustments to two state pension plans—the Corrections Officer Retirement Plan (CORP) and the Elected Officials’ Retirement Plan (EORP)—based on Senate Bill 1442 and House Bill 2545.[1]

    Senate Bill 1442 (SB 1442), which was signed into law in April 2017, was designed to make adjustments to CORP based cost-of-living adjustments capped at 2 percent, rather than permanent benefit increases. CORP is the public retirement plan for correctional officers, probation officers, and surveillance officers. SB 1442 would also require corrections officers hired on or after July 1, 2018, to enroll in a defined-contribution (DC) retirement plan, rather than the defined-benefit (DB) retirement plan. A DB retirement plan, which officers hired before July 1, 2018, would continue to have, is a retirement benefits plan that guarantees a monthly or annual payment to retired employees based on a certain formula using years of employment, employee age, and employee earnings. A DC retirement plan is a retirement benefits plan that serves as a deferred compensation retirement savings, such as a 401(k).[1]

    House Bill 2545 (HB 2545), which the legislature passed in March 2017 but the governor had not yet signed or vetoed, was written to make adjustments to EORP based cost-of-living adjustments capped at 2 percent, rather than permanent benefit increases.[1]

    In 1990, Arizona adopted a permanent benefit increase (PBI) formula, which provided increases in retirement payments based on investment earnings. In 1998, the maximum possible increase was capped at 4 percent. The 2018 amendment’s proposed cost-of-living adjustments (COLA) would be based on the inflation rate for the Metropolitan Phoenix-Mesa Consumer Price Index, with the maximum possible increase capped at 2 percent.[1][2]

    Article 29 of the Arizona Constitution describes public retirement systems as a contractual relationship between members and the state, requires that public retirement systems be funded with contributions and investment earnings, and declares that retirement system benefits shall not be diminished or impaired.[3] Article 29 was added to the state constitution in 1998 via Proposition 100.[4] Due to two court cases regarding the interpretation of Article 29— and —the Arizona State Legislature needs to amend Article 29 to make changes to pension plans that would have the effect of decreasing benefits for current and retired members.[5][6] According to the Arizona Senate Research Staff, the amendment could have a positive impact on the state’s General Fund because of the lower 2-percent cap on annual increases could decrease pension benefits.[2]

    Text of measure

    Constitutional changes

    See also: Article 29, Arizona Constitution

    The measure would amend Section 1 of Article 29 of the Arizona Constitution. The following underlined text would be added:[1]

    Public Retirement Systems

    A. Public retirement systems shall be funded with contributions and investment earnings using actuarial methods and assumptions that are consistent with generally accepted actuarial standards.

    B. The assets of public retirement systems, including investment earnings and contributions, are separate and independent trust funds and shall be invested, administered and distributed as determined by law solely in the interests of the members and beneficiaries of the public retirement systems.

    C. Membership in a public retirement system is a contractual relationship that is subject to article II, section 25.

    D. Public retirement system benefits shall not be diminished or impaired, except that:

    1. Certain adjustments to the public safety personnel retirement system may be made as provided in Senate Bill 1428, as enacted by the fifty-second legislature, second regular session.
    2. Certain adjustments to the corrections officer retirement plan may be made as provided in Senate Bill 1442, as enacted by the fifty-third legislature, first regular session.
    3. Certain adjustments to the elected officials’ retirement plan may be made as provided in House Bill 2545, as enacted by the fifty-third legislature, second regular session.

    E. This section preserves the authority vested in the legislature pursuant to this constitution and does not restrict the legislature’s ability to modify public retirement system benefits for prospective members of public retirement systems.[7]

    Campaign finance

    See also: Campaign finance requirements for Arizona ballot measures

    As of June 3, 2018, there were no ballot measure committees registered in support of the measure or in opposition to the measure.[10]

    Reporting dates

    In Arizona, ballot measure committees file a total of six campaign finance reports in 2018. The filing dates for reports are as follows:[11]

    Background

    Pension Policy Logo on Ballotpedia.png

    Public pensions in Arizona

    See also: Public pensions in Arizona

    According to the United States Census Bureau, there were 99 public pension systems in Arizona as of 2016. four were state-level programs while the remaining 95 were administered at the local level. Membership in Arizona’s state and local pension systems totaled 487,795. Membership in Arizona’s state pension systems totaled 469,828. The four state-level pension systems were the:[12]

    1. Arizona State Public Safety Personnel Retirement System (SPSPRS): the public retirement program for full-time police officers and full-time firefighters.
    2. Arizona State Retirement System (SRS): the public retirement program for public and charter school teachers, employees of public colleges and universities, local government employees, and special district employees.
    3. Arizona Elected Officials’ Retirement System (EORS): the public retirement program for elected officials.
    4. Arizona Corrections Officer Retirement Plan (CORP): the public retirement program for corrections officers, local government detention officers, dispatchers, and probation officers.

    Funding of public pensions in Arizona

    See also: Pension health in Arizona

    According to the Pew Charitable Trusts, the funded ratio for Arizona’s public pension system was 63 percent in fiscal year 2015. This funded ratio was lower than the funded ratio in 2012, which was 72 percent. A funded ratio is a pension’s assets to liabilities. The higher the funded ratio, the more assets the pension program has compared to liabilities. One state—South Dakota—had a funded ratio of 100 percent or more in 2015, according to the Pew Charitable Trusts. The following chart compares Arizona’s funded ratio in 2015 to neighoring states:[13]

    [hide] Pension health metrics from the Pew Charitable Trusts report, fiscal years 2012-2015 (dollars in millions)
    State 2015 Funded ratio Net amortization
    Liability Pension debt 2012 2013 2014 2015 Employer benchmark Percent paid
    Arizona $65,738 $24,168 72% 72% 64% 63% $1,900 86%
    California $669,956 $174,122 77% 72% 76% 74% $18,943 79%
    Colorado $70,583 $27,934 63% 61% 64% 60% $2,104 65%
    Nevada $46,195 $11,481 71% 69% 76% 75% $1,698 88%
    New Mexico $36,736 $10,799 63% 67% 74% 71% $869 86%
    Utah $31,150 $4,463 76% 80% 88% 86% $784 139%
    Totals in the U.S. $3,850,168 $1,091,828 72% 72% 75% 72% $102,949 92%
    Source: The Pew Charitable Trusts, “The State Pension Funding Gap: 2015,” accessed August 21, 2017

    Article 29 of Arizona Constitution (Proposition 100)

    See also: Arizona Public Retirement Systems Rules, Proposition 100 (1998)

    Article 29 of the Arizona Constitution describes public retirement systems as a contractual relationship between members and the state, requires that public retirement systems be funded with contributions and investment earnings, and declares that retirement system benefits shall not be diminished or impaired.[3] Article 29 was added to the state constitution in 1998 via Proposition 100. More than 61 percent of voters approved Proposition 100. The Arizona State Legislature referred the proposition to the ballot through a 39-16 vote in the state House and a 21-9 vote in the state Senate.[4]

    Due to two court cases regarding the interpretation of Article 29— and —the Arizona State Legislature would need to amend the article to change public retirement benefits.

    Fields v. Elected Officials’ Retirement Plan

    In 2011, the Arizona State Legislature approved a bill to change the formula for the Elected Officials’ Retirement Plan’s (EORP) permanent benefit increases for retired members and increased the amounts that employed members were required to contribute. The bill had the effect of decreasing the benefits increases for retired members from 4.0 percent to 2.7 percent in 2011 and zero percent in 2012 and 2013.[5]

    Kenneth Fields and Jefferson Lankford—retired state judges and members of EORP—sued the state, alleging the bill violated Article 29 of the Arizona Constitution and Article I of the U.S. Constitution. In March 2013, the Maricopa Superior Court ruled in favor of Fields and Lankford, concluding that the bill violated Article 29. The court did not address whether the bill violated the U.S. Constitution.[5]

    The state appealed the ruling to the Arizona Supreme Court, which agreed with the lower court’s ruling that the bill was an unconstitutional diminishment or impairment of the retirement benefits. Therefore, Fields and Lankford—and the class of individuals the retired judges represented—were entitled to the permanent benefit increases established before the legislature’s bill was enacted. The bill, according to the court, impaired the benefits of retired members of EORP.[5]

    According to Hayleigh Crawford, published in the Arizona State Law JournalFields v. EORP meant that the state legislature had no power to amend permanent benefit increase formulas in ways that would reduce benefits for retired or retirement-eligible members than the members would have received under the formula at the time of their hiring.[14]

    Hall v. Elected Officials’ Retirement Plan

    Whereas retired members of EORP challenged the legislature’s 2011 bill in Fields v. EORP, employed members challenged the bill in Hall v. EORPPhilip Hall and Jon Thompson—employed state judges and members of EORP—argued that because retirement benefits were part of their employment contracts, the legislature could not change the terms of employee’s retirement benefits to their detriment. Like in Fields v. EORP, Hall and Thompson said the bill violated their rights under Article 29 of the Arizona Constitution. The Maricopa Superior Court ruled for Hall and Thompson, concluding that the bill violated Article 29. The court held that Article 29 protected the permanent benefit increases and contribution amounts of employed members at the time of their hiring because these benefits were part of the members’ contractual relationship with the state. The state appealed to the Arizona Supreme Court, which upheld the lower court’s judgment in Hall v. EORP.[6]

    Proposition 124 (2016)

    See also: Arizona Public Retirement Benefits Amendment, Proposition 124 (May 2016)

    On May 17, 2016, voters in Arizona approved Proposition 124 in a 70-30 percent vote. Proposition 124 amended Article 29 to replace the permanent benefit increase for the Public Safety Personnel Retirement System (PSPRS)—the retirement plan for full-time police officers and full-time firefighters—with a cost-of-living adjustment. Increases in the COLA for the PSPRS was capped at two percent per year. Proposition 124 also allowed employees hired on or after July 1, 2017, to have a defined contribution retirement plan or a defined benefit hybrid plan.[15]

    Referred amendments on the ballot

    From 1996 through 2016, the Arizona State Legislature referred 49 constitutional amendments to the ballot. Voters approved 31 and rejected 18 of the referred amendments. All of the amendments were referred to the ballot for elections during even-numbered election years. The average number of amendments appearing on even-year ballots was between four and five. In 2016, two referred amendments were on the ballot. The approval rate of referred amendments at the ballot box was 63.3 percent during the 20-year period from 1996 through 2016. The rejection rate was 36.7 percent.

    Path to the ballot

    See also: Amending the Arizona Constitution

    In Arizona, a constitutional amendment must be passed by a simple majority vote in each house of the Arizona State Legislature during one legislative session.

    Rep. David Livingston (R-22) introduced the amendment into the state legislature as House Concurrent Resolution 1010 (HCR 2032) during the 2018 legislative session. On February 21, 2018, the Arizona House of Representatives approved the amendment in a vote of 57 to zero with three members not voting. On March 29, 2018, the Arizona State Senate passed HCR 2032 in a unanimous vote of 30 to zero.[1]

    HCR 2032 also withdrew an amendment, the Arizona Corrections Officer Retirement Plan Measure, that was certified to appear on the ballot in November 2018. The Corrections Officer Retirement Plan Measure was passed in April 2017 and was designed to address the retirement plans of correctional officers, but not elected officials. The Adjustments to Elected Officials’ Retirement Plan and Corrections Officer Retirement Plan Measure was placed on the ballot in lieu of the former measure.[1]

    How to vote

    See also: Voting in Arizona

    Poll times

    In Arizona, all polling places are open from 6:00 a.m. to 7:00 p.m. local time. An individual who is in line at the time polls close must be allowed to vote.[16][17]

    Registration requirements

    To vote in Arizona, one must be a citizen of the United States and a resident of an Arizona county. A voter must be 18 years or older on or before Election Day.[18]

    To be eligible to vote in an election one must register at least 29 days prior to the election. A citizen can register online, in person at the county recorder’s office, or by mail.[18]

    Citizens must provide proof of citizenship to register to vote. Acceptable forms of documentation include birth certificates, passports, and U.S. naturalization documents. On June 4, 2018, Secretary of State Michele Reagan announced that proof of citizenship would not be required of individuals who have already provided such proof to the state department of motor vehicle. Reagan also announced that the state would allow individuals who registered without providing proof of citizenship to cast ballots in federal elections (though not in state or local elections).[18][19]

    Online registration

    See also: Online voter registration

    Arizona has implemented an online voter registration system. Residents can register to vote by visiting this website.

    Voter ID requirements

    To vote on Election Day in Arizona, a voter must present some form of identification at the polls. The identification does not necessarily need to include a photo. Proposition 200, approved by voters in 2004, required voters to present evidence of U.S. citizenship prior to voting. On June 17, 2013, the Supreme Court of the United States ruled that states cannot require proof of citizenship in cases of voter registration for federal elections unless the state receives federal or court approval to do so. The court ruled 7-2. Justices Samuel Alito and Clarence Thomas dissented.[20][21][22][23]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 Arizona State Legislature, “House Concurrent Resolution 2032,” accessed March 30, 2018
    2. ↑ 2.0 2.1 Arizona State Legislature, “Arizona Senate Research Staff Analysis,” accessed April 2, 2018
    3. ↑ 3.0 3.1 Arizona State Legislature, “Article 29 of the Arizona Constitution,” accessed April 2, 2018
    4. ↑ 4.0 4.1 Arizona Secretary of State, “Proposition 100 (1998),” accessed April 2, 2018
    5. ↑ 5.0 5.1 5.2 5.3 Arizona Supreme Court, “Fields v. Elected Officials’ Retirement Plan,” February 20, 2014
    6. ↑ 6.0 6.1 Arizona Supreme Court, “Hall v. Elected Officials’ Retirement Plan,” November 10, 2016
    7.  Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
    8.  Note: These totals include all contributions and may include in-kind donations as well as cash donations.
    9.  Note: This date is the most recent date on which Ballotpedia staff researched campaign finance data. The actual date through which this information is accurate depends on the campaign finance reporting requirements in this state.
    10.  Arizona Secretary of State, “Campaign Finance Committee Search,” accessed April 2, 2018
    11.  Arizona Secretary of State, “Elections Calendar & Upcoming Events,” accessed December 6, 2017
    12.  United States Census Bureau, “State- and Locally-Administered Defined Benefit Pension Systems – All Data by State and Level of Government: 2016,” accessed April 2, 2018
    13.  The Pew Charitable Trusts, “The State Pension Funding Gap: 2015,” accessed August 21, 2017
    14.  Crawford, H.S. “Going for Broke: Arizona’s Legal Protection of Public Pension Benefits .” Arizona State Law Journal 46, 2. (2014): pages 636-682.
    15.  Arizona Legislature, “Proposition 124,” accessed March 30, 2018
    16.  Arizona Revised Statutes, “Title 16, Section 565,” accessed January 3, 2014
    17.  Arizona generally observes Mountain Standard Time; however, the Navajo Nation observes daylight saving time. Because of this, Mountain Daylight Time is sometimes observed in Arizona.
    18. ↑ 18.0 18.1 18.2 Arizona Secretary of State, “Voter Registration and Education,” accessed June 9, 2014
    19.  Arizona Capitol Times, “Settlement removes hurdles to voter registration,” June 4, 2018
    20.  The Republic, “Supreme Court to weigh Arizona’s voter-ID law,” March 17, 2013
    21.  KMBZ, “Supreme Court to Hear Challenge to Arizona Voter ID Law,” March 17, 2013
    22.  Yahoo News, “Supreme Court strikes down Arizona voter ID citizenship law,” June 17, 2013
    23.  Huffington Post, “Supreme Court Strikes Down Arizona Voter Registration Citizenship Requirement,” June 17, 2013
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