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Bill would tighten Ariz. public retirement systems

Newly appointed State Representative and Speaker of the House Kirk D. Adams addresses his fellow Representatives for the first time at the Arizona Capitol on Monday Jan. 10, 2011n Phoenix. (AP Photo/Darryl Webb)

State Representative and Speaker of the House Kirk D. Adams addresses his fellow Representatives at the Arizona Capitol on Monday Jan. 10, 2011. (AP Photo/Darryl Webb)

A bill introduced by a top Arizona legislative leader would make sweeping changes to the state’s public employee retirement systems, mostly affecting new hires but also current employees to some degree.

House Speaker Kirk Adams, the bill’s chief sponsor, and fellow Republican Rep. Justin Olson of Mesa filed the Arizona bill late Monday, the deadline to introduce House bills in the current session.

Proposed changes that would apply to one or more of the four state retirement systems include raising age and tightening other limits on retirement eligibility, eliminating cost of living adjustments and requiring pension-system contributions from employers who hire retirees.

Others would increase employees’ payments, smooth out salary calculations for determining benefits and end refunds to terminated workers for their former employers’ contributions.

Also, there would be a study on whether the state should replace its defined-benefit pension in favor of systems based on defined contributions.

“The overhaul seeks to create a more financially sound system for the employees who are counting on the fund for their retirement and lowers the burden on taxpayers,” Adams said.

State and local governments’ pension programs are under a spotlight nationally by lawmakers and others due to the programs’ rising costs and poor investment performances during the Great Recession, amid general concerns about government spending.

However, the National Conference of State Legislatures, the National League of Cities and other government groups on Tuesday said most public pension programs are not in crisis and that those that are underfunded are taking steps to strengthen themselves.

Approximately 255,400 public employees belong to the state’s four retirement systems, which pay benefits to approximately 111,300 retirees.

Most state and local government employees, including school teachers, belong to the largest plan, the Arizona State Retirement System. There are smaller plans for public safety employees, corrections officers and elected officials, including judges. The plans’ funding levels to support.

The four Arizona systems’ funding levels to support their future obligations to pay benefits range from 65 percent to 80 percent.

Pete Dunn, a lobbyist for a judges association, said the group would object to changes to previously set retirement-system terms for current judges.

“Generally, our position is a contract is a contract,” Dunn said. “We generally don’t have a problem with changes for people hired after the effective date of the legislation. We’re supportive of whatever it takes to make the plan solvent.”

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