Going for Broke: Arizona’s Legal Protection of Public Pension Benefits

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Hayleigh S. Crawford

In 2012, public pension systems responsible for providing retirement benefits for hundreds of thousands of state employees were underfunded by an estimated one trillion dollars. The recent recession’s enormous toll on investment earnings, combined with many states’ failures to make the required contributions to their retirement funds, has left state legislatures, employees, and taxpayers with a looming debt and few palatable options.

Arizona is no exception to the nationwide public pension problem. Within ten years, Arizona’s pension funds have gone from “healthy” to seriously underfunded. As a result, Arizona taxpayers are paying more than ever for public employee retirement benefits: in 2010, Arizona taxpayers were paying paid at least $1.39 billion annually to fund the state pension systems, more money than the estimated cost for higher education, corrections, or an indigent healthcare program. That pension liability represented a 448% increase in pension costs over the past ten years. With Arizona’s state budget projecting a deficit of $1.24 billion between fiscal years 2012 and 2014, the state legislature has been forced to take a hard look at pension reform options.

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