Prop 124 would change police, fire pensions

Along with education funding, Arizona voters will decide in the May 17 special election whether to change the state’s pension system for police officers and firefighters.

Proposition 124 would change the Public Safety Personnel Retirement System by adding a new cost-of-living-adjustment formula for employees and retirees to reduce the system’s costs. The measure is part of a pension-reform package the Legislature passed this session.

If you vote “yes”

A “yes” vote would cap annual cost-of-living adjustments for retirees and employees in the retirement system at 2 percent. It would also tie pension cost-of-living adjustments to the consumer price index for metropolitan Phoenix.

The proposed changes stem from calls to reform the underfunded public-safety pension system. Economic downturns in 2001 and 2008 ate into money the system has to pay out, said John Ortolano, president of the Arizona Fraternal Order of Police, which supports the measure.

“Those two events drastically reduced the funding in our public-safety retirement system and it reached a point where something needed to be done,” Ortolano said.

Some of the proposed changes proposed are tough, but employees recognized the need for change, said Bryan Jeffries, president of the Professional Fire Fighters of Arizona, which also backs Proposition 124.

“It’s better to save the system and have it be sustainable so we can enjoy it decades into the future than to allow it to become insolvent,” Jeffries said.

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Even if voters reject Proposition 124, legislation aimed at the public-safety pension system will still go into effect. Senate Bill 1428, signed into law by Gov. Doug Ducey in February, creates a new pension tier for public-safety employees hired after July 1, 2017. It raises the rate at which they contribute to their pensions from 11 percent to 50 percent and increases the age at which they can receive benefits to 55. They also have access to a 401(k)-type plan.

Changes to the current system must be approved through a constitutional amendment, which is why Proposition 124 is on the ballot. All told, supporters argue the changes will save $1.5 billion over 30 years.

The measure is also backed by the League of Arizona Cities and Towns, the Arizona Chamber of Commerce and Industry and most state lawmakers. Tucson Mayor Jonathan Rothschild supports it, too.

If you vote “no”

A “no” vote would leave the public-safety pension system unchanged, with a 4 percent compounded increase each year.

No formal opposition to Proposition 124 has formed and no opposing statements were filed with the Secretary of State’s Office for mailers sent to voters before the special election. The measure got unanimous approval in the state Senate, but 10 House Republicans voted against it.

Some police officers have said lower pension benefits could reduce the quality of new hires, Ortolano said.