What is the ballot measure? Proposition 125 will ask voters to approve measures affecting the Correction Officer Retirement Plan (CORP) and Elected Officials Retirement Plan (EORP) by changing the formula for determining annual increases.
Background: The Arizona Constitution states that “public retirement system benefits shall not be diminished or impaired,” except that the legislature may alter benefits for “prospective members of public retirement systems.” Voters can revise the system, by exercising their power to amend the Constitution.
Under current law, CORP and EORP retirees are entitled to permanent annual benefit increases (PBIs) that are tied to returns on investments. Those PBIs may not exceed 4% in any one year.
- Prop 125 would replace the return-on-investments plan with a plan based on an annual cost of living adjustment (COLA) determined by changes in the Phoenix-Mesa Consumer Price Index. Those increases cannot exceed 2% in any one year.
- This change would apply to all members of CORP and EORP, including those who have already retired and their survivors.
The Joint Legislative Budget Committee estimates that Prop 125 will reduce existing liabilities of these retirement plans by $275 million, as current debt is paid off in the next 20-30 years, and as the COLA change reduces the cost of future benefits.
This measure would make the Elected Officials' and the Correction Officers’ Retirement Plan the same as the Public Safety Personnel Retirement System (PSPRS), which was amended by the voters in 2016.
- The Act stabilizes and improves Arizona’s underfunded pension system.
- The Act replaces a faulty pension formula dependent on market returns with a guaranteed cost-of-living-adjustment that is common to most public pension systems.
- In 2016 voters overwhelmingly approved a similar measure reforming the pension system for police, sheriff’s deputies and firefighters. This Act brings consistency to the public pension system.
- Without this measure, state and local governments may have to cut basic services or raise taxes to cover escalating pension costs, which would harm the state’s economy and future growth.
- Savings under Prop 125 will accrue to all CORP and EORP employers, which include the state, counties and cities and towns. Savings can be used to fund community services families rely on, like public safety, education, parks and libraries, safer roads and infrastructure.
- Retirees and their beneficiaries are entitled to benefits that were promised and earned. These benefits were part of a compensation package that recognized difficult working conditions and offset lower salaries.
- It is unfair to reduce benefits retroactively, particularly for retirees on fixed incomes who depend on these payments.
- Qualified candidates will be discouraged from applying for jobs if they lack confidence that future benefits, but would prefer to spend the monies on other programs.
- Arizona Chamber of Commerce
- Public Safety Personnel Retirement System Board of Trustees
- One person submitted an opposing statement to the Secretary of State