Arizona lawmakers have given early approval to invest much of the state’s anticipated budget surplus into fully funding the retirement funds of public safety workers.
State Rep. David Cook’s House Bill 2035 appropriates nearly $1.6 billion to fill the coffers of the Public Safety Personnel Retirement System (PSPRS), the public pension fund responsible for the retirement payouts of several state safety officers such as Game & Fish officers and campus police at the state’s universities.
Most of the $1.6 billion would come from an anticipated budget overflow from the current fiscal year.
“Our state continues to take deliberate steps to responsibly address its debt, rather than kick it down the road for future generations, as the federal government has,” the Republican from Globe said.
Public pensions are contracts between workers and employers where the public entity will pay a regular stipend from a collective account once the worker stays with the entity for a set amount of years. Retirement compensation is often based on the final years of pay before a worker retires and cannot be diminished. Benefits are approved by lawmakers.
The Legislature spent $1 billion in state funds to shore up pension accounts of Arizona Department of Public Safety officers and state correctional officers in the 2021 fiscal year.
The bill passed nearly unanimously in the House Appropriations Committee Wednesday, though several lawmakers were hesitant to spend such a large amount on paying down pensions. Democrats questioned why the total amount was to be directed to law enforcement instead of the Arizona State Retirement System, which pays for teacher pensions.
Cook said the thought behind paying down PSPRS is akin to paying down the state’s highest-interest loans first.
The lone vote against the bill came from Rep. Jake Hoffman, R-Queen Creek, who supported paying down debt but described investing more taxpayer dollars into the state’s pension funds as throwing good money into a “broken system.”
The bill, Cook said, is likely to be scaled back in order to appease his fellow lawmakers. He stressed in a Thursday release that fully-funding public safety pensions is good advertising when looking to attract new law enforcement officers.
“By paying down our pension liabilities and reducing our overall state debt, we will make sure that our highly-regarded public safety professionals receive the pay and pensions that we promised them – just as they have promised us to protect and serve. Moreover, it will help strengthen the fundamental position of Arizona’s economy, attract new opportunities, and drive future growth,” Cook said.
According to a 2021 report from the Pew Charitable Trusts, Arizona has funding for only 65.2% of its pension liabilities, less than all but a dozen other states. As of 2019, the state has $49.9 billion in assets against $76.6 billion in liabilities.
The problem extends to local government as well. In June, 2021, the town of Douglas took out a $39 million pension obligation bond. Glendale issued a $253 million pension bond that same month.
In its current form, Cook’s legislation appropriates the following amounts:
Arizona Game and Fish Department $97,292,500
Arizona State University Campus Police $23,602,900
University of Arizona Campus Police $15,677,800
Attorney General Investigators $9,132,900
Arizona State Parks Board Rangers $8,833,200
Department of Emergency and Military Affairs $8,559,300
Northern Arizona University Campus Police $7,734,200
Department of Liquor Licenses and Control $7,636,700
Administrative Office of the Courts – Probation $421,262,900
Department of Juvenile Corrections $73,940,700
Department of Public Safety Dispatchers $6,352,000
Department of Public Safety Detention Officers $309,200
