Unions Sue Arizona over Pension Changes

July 20, 2011 (PLANSPONSOR.com) - Three unions have challenged an Arizona budget provision that shifts the proportions of retirement contributions paid by government workers and employers.

According to the Associated Press, the lawsuit filed backed by the American Federation of State, County and Municipal Employees and two unions representing school employees— the Arizona Education Association and the American Federation of Teachers – says the changes to the Arizona State Retirement System violate state constitutional protections for contracts. The filing seeks to retain commitments that it contends were made to individual state and local government employees when they joined the retirement system.  

“We are asking the state to honor its contract with its employees and provide a fair level of security and independence after finishing a career of educating Arizona’s students,” said Andrew Morrill, president of the education association, according to the news report.

The AP reports that under the challenged budget provision, more than 200,000 workers will pay 53% of the total contributions to the Arizona State Retirement System and the amount paid by their employers will be 47%. The split previously was 50-50.

The contribution changes will save the state government approximately $40 million in the current fiscal year, according to the legislative budget staff. That figure includes savings the state gets for contributions for its workers and for those of K-12 school districts, but it doesn’t include savings for local governments such as municipalities and counties.

Rhode Island and New Hampshire are also facing lawsuits over public pension changes (see RI Judge to Hear Unions’ Challenge to Pension Changes).