PHOENIX (AP) — A judge has struck down an Arizona law that increased the amount state employees must contribute toward their pensions as unconstitutional.
Maricopa County Superior Court Judge Eileen Willett wrote in a Friday ruling that a state law that went into effect on July 1 illegally changed the contract between the state and its employees. State law, she said, forbid laws “impairing the obligation of a contract.”
“When the plaintiffs were hired as teachers, they entered a contractual relationship with the State regarding the public retirement system of which they became members,” Willett wrote. “Their retirement benefits were a valuable part of the consideration offered by their employers upon which the teachers relied when accepting employment.”
The law increased the contributions state employees must make to their pension from 50 percent to 53 percent.
The Arizona Republic reports the change was made as a cost-cutting move intended to state $60 million a year.
Seven schoolteachers sued after the law took effect.
A spokesman for the Arizona State Retirement System said the organization will review the decisions and its options with the Attorney General’s Office before deciding whether to appeal the decision.
Key Republican lawmakers have anticipated the ruling and have proposed rescinding the hike. That could be done through the budget, which lawmakers are still crafting, or via legislation.
House Bill 2264 would return to the previous funding system of a 50-50 split between the state and its workers.
It also would require the state to refund to public employees any contributions made this year in excess of 50 percent.
The bill passed the House Employment and Regulatory Affairs Committee, but it still needs a hearing before the House Appropriations Committee.