Late last week representatives from all of the Law Enforcement Groups and the Firefighters Association met with high ranking officials from Governor Brewer’s staff. The Governor presented some proposed changes to the current SB 1609. The Governor didn’t indicate if or when she will propose these changes to leadership in both the House and the Senate. To this point upper leadership in both the House and Senate has been unresponsive to any changes to the current amended SB 1609. We do not know how well received these proposed changes might be. Here is an overview of potential changes that might be proposed by Governor Brewer.
Employee Contribution Rate:
Current SB 1609: Goes up 4% over 3 years (2%, 1%, and 1%) Tops out at 11.65%.
Governor: Goes up 4% over 5 years with lower rate increases in the first couple years. Might also contain a provision that rates will go back down depending on the health of the fund.
Current SB 1609: Eliminates COLOs in excess of 20 years.
Governor: Pays out a 4% COLA this year and does not pay out a COLA next year. The following formula would be implemented going forward: Two part test: First, fund must earn over 10.5% for the year. Once that is met the COLA would be paid based on the funding level of the fund. 60% = 2% COLA, 65% = 2.5%, 70% = 3.0%, 75% = 3.5%, 80% and higher = 4.0%. The excess earning fund would also be eliminated. This could allow COLA’s to be paid out faster than the current SB 1609.
Military / Prior Out Of State Service Time:
Current SB 1609: Eliminates the ability to purchase any prior time.
Governor: Would continue to allow the purchase of military and prior out of state service time, the same as now. The only difference is you can’t purchase time if collecting a retirement from the military or prior place of service.
Current SB 1609: Stays same for 20+ years of service, changes it for 5 – 20 years of service and eliminates it for less than 5 years of service.
Governor: Would keep DROP for all CURRENT actives. Only change is employee would pay the employee contribution rate while in DROP but would receive the money back with 2% interest when the employee exits DROP. So you would get your contributions back. NEW hires after January 1, 2012 will no longer be eligible for DROP
There are some other areas where the Governor’s proposal may be better than the current SB 1609 i.e. study committee and pension forfeiture but above are the main differences that will impact all members. The Governor’s proposal is substantially better than the current SB 1609, but still poses questions as to whether it is constitutional or not. I imagine that even if the Governor’s proposal is adopted PLEA will need to make a determination whether or not litigation is in the best interest of the membership, the State, and the pension fund. We will keep you posted as to the status of SB 1609 and any changes that get proposed or become adopted. The next step will be for SB 1609 to go to the entire House to be voted on. This could happen this week or next.
Please continue to email or call your legislators at least ONCE a WEEK. Also, have your family and friends do the same. The pressure we are applying on them is having a huge impact.