Pension funding plan, Prop. 124, enjoys substantial early lead

PHOENIX — Voters on Tuesday appeared ready to amend the Arizona Constitution in a bid to cut future pension costs for government public safety employees.

Proposition 124 is part of a series of changes adopted earlier this year by lawmakers to restore financial stability to the Public Safety Personnel Retirement System. It provides pension benefits for police and firefighters.

Many of the changes in the law are prospective, affecting only people who will be hired in the future.

But proponents of the change say it's also necessary to curb future cost-of-living increases for existing employees and those already retired.

The problem is an existing constitutional provision which says pension benefits for public employees "shall not be diminished or impaired.” Proposition 124 gives lawmakers limited permission to make alterations.

There is no dispute the pension system is broken. Its obligations exceed its assets by more than $6 billion.

In an effort to bridge the gap and put the fund on financial footing, lawmakers previously voted to require participating governments to pay additional amounts to eventually make up the difference. The results, according to some city officials, have been little short of devastating.

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The Flagstaff Fire Department, for example, pays premiums equal to 70 percent of its workers' salaries. For Prescott, its police pension obligations are at 72 percent. And Bisbee is paying almost as much in premiums as the salary obligations.

Actuaries who worked on the plan said the state can't do anything to wipe out the existing debt. But they said new limits on pensions for employees will help limit future obligations.

In early results, the measure was ahead 70 percent to 30 percent.

In early returns, more than 578,000 voters backed Proposition 124, compared to nearly 248,00 who voted against the measure statewide.

It is a huge win for first responders, said Bryan Jeffries, president of the Professional Fire Fighters of Arizona.

"Tonight's landslide vote passing Proposition 124 puts this system back on the path to full funding,” he said.  "And it will take the financial pressure off our cities and towns – freeing up budget dollars for essentials like public safety, streets and education – while saving state taxpayers more than $1.5 billion over 30 years.”